Herbalife shares sank nearly 5 percent on Thursday after The Wall Street Journal reported that its former CEO resigned last month after federal investigators got a hold of recorded comments he made years ago about bypassing expense limits.
The WSJ, citing unnamed sources, said the Justice Department and Securities and Exchange Commission have been investigating the nutritional supplement maker’s anti-corruption policies in China. The Justice Department received a copy of the recorded comments by Richard Goudis, the report said.
About 10 years ago, when Goudis was CFO, he told a fellow employee working in Hong Kong or mainland China to ignore internal expense-account limits on entertainment, the sources told WSJ.
Goudis stepped down last month. At the time, Herbalife said he was leaving over comments that recently came to light made by him before he became CEO that were “contrary to the Company’s expense-related policies and business practices.” Board Chairman Michael Johnson stepped in to the CEO role on an interim basis.