Nature's Sunshine under scrutiny

PROVO — Dietary supplement maker Nature's Sunshine Products Inc. is coming under increasing scrutiny by federal regulators for auditing omissions, income tax returns and its foreign operations — troubles that threaten its stock-trading privileges.

The company acknowledged Thursday that it had received a U.S. Securities and Exchange Commission subpoena for internal documents relating to operations in 32 other countries. The U.S. Department of Justice has requested the same documents, the company said.

Nature's Sunshine has failed to file quarterly or annual financial reports since 2005 and blames the resignation of auditor KPMG for the omission. KPMG has said it resigned because company executives failed to take its advice.

Nature's Sunshine said it can't resume filing the mandatory reports until its new auditor, Deloitte & Touche, completes a thorough review of its books going back years.

The IRS is auditing the company's income tax returns for 2002 through 2005, the company said Thursday.

The tax audit "is significant especially since it covers such a long period of time — four years," said Phillip Kim, lead counsel for several Nature's Sunshine shareholders in a class-action lawsuit against the company over suspected insider trading and securities law violations.

SEC documents released Thursday warn that the company risks having its stock registration suspended for up to a year, meaning its shares couldn't be traded on over-the-counter bulletin boards. An administrative law judge is expected to act in about four months.

Shares of Nature's Sunshine closed up 95 cents, or 8 percent, to $12.70 on Friday.

Nature's Sunshine is a multilevel marketing firm with nearly 600,000 independent sales distributors who sell encapsulated vitamins and herbs, other food supplements and personal care products.

The company said in an unaudited statement Thursday that it earned $3.7 million on $94 million in sales for in the first quarter, reversing a $1.3 million loss for the same quarter of 2006.