The Federal Trade Commission (FTC) released 192 complaints filed against Herbalife Ltd. (NYSE: HLF) over the past seven years in response to a Freedom of Information Act request filed by the New York Post. In an exclusive report today, the Post says that some of the complaints "contained a note referring to a 'pending law enforcement action', [but] did not say whether the action was civil or criminal."
Herbalife was the target of a detailed charge by Pershing Square Capital Management chief William Ackman that the company is a "pyramid scheme." Ackman has built up a large short position in Herbalife stock, and while there are plenty of others who believe he is wrong - including activist investor Carl Icahn and hedge fund manager Dan Loeb - the threat that the FTC will take some action against the nutrition and weight-loss firm will send investors running for the exits.
Just a week ago the FTC announced an investigation into an unnamed illegal pyramid scheme, and shares of both Herbalife and Nu Skin Enterprises Inc. (NYSE: NUS) dived. Even the fact that the investigation did not ultimately involve either firm indicates how jittery investors are about multilevel marketing firms like Herbalife.
Shares of Herbalife are down about 10.3% in premarket trading this morning, at $31.40 in a 52-week range of $24.24 to $73.00. Nu Skin's shares are down about 3.7%, at $40.26 in a 52-week range of $32.36 to $62.01.
Filed under: 24/7 Wall St. Wire, Activist Investor, Consumer Product, Food, Law, Regulation Tagged: HLF, NUS