Tags: Herbalife | FTC | refund | probe

Herbalife Shares Tumble on Law Enforcement Probe Report

Monday, 04 Feb 2013 12:40 PM

 

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Herbalife Ltd. shares were down 4.6 percent on Monday after a newspaper reported that the seller of weight loss products faces a law enforcement probe.

The New York Post report, which sent the shares down as much as 12 percent, stems from documents the paper obtained from the U.S. Federal Trade Commission. The documents, which have also been seen by Reuters, stem from a complaint to the agency from a person in Durango, Iowa.

According to the complaint, one of 188 the FTC sent to the Post after a Freedom of Information request, the person believes Herbalife should provide a refund of hundreds of dollars in payments.

The complaint contained a note urging investigators to contact the Internet Crime Complaint Center before proceeding in order to "prevent interference with pending law enforcement action."

The Internet Crime Complaint Center (IC3) is a partnership between the Federal Bureau of Investigation and the National White Collar Crime Center.

Herbalife said that for a direct selling company of its size it has had relatively few complaints to the FTC, the U.S. government's consumer watchdog. A source close to the company said Herbalife is not aware of any FTC investigation.

The FTC declined to comment on the investigation detailed in the documents.

Herbalife has been in the spotlight since December when activist hedge fund manager William Ackman revealed a short position in the stock and called the business "a pyramid scheme."

Herbalife shares were down $1.60, or 4.6 percent, at $33.47 on the New York Stock Exchange.

© 2014 Thomson/Reuters. All rights reserved.

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