Herbalife Denies Criminal Probe Report
LOS ANGELES (AP) -- Herbalife Ltd. is denying a report that it is facing criminal investigation.
The nutritional supplement company's stock plunged Friday after a report in the Financial Times, citing unnamed sources, said that the U.S. Department of Justice and the Federal Bureau of Investigation are investigating the company. The report said the criminal investigation by the FBI and US attorney's office in Manhattan would raise the stakes for Herbalife, which is already facing civil inquiries from multiple government agencies.
Herbalife shares fell nearly 14 percent to close at $51.48.
The company said in a statement that it has no knowledge of any ongoing investigation by the DOJ or the FBI. It also said that it has not received any request for information from either agency.
"We take our public disclosure obligations very seriously," Herbalife said in a statement.
The company, which uses a network of distributors to sell its nutritional supplements and weight-loss products globally, is no stranger to the limelight.
Herbalife has faced very public accusations for some time by hedge fund manager William Ackman of operating as a pyramid scheme, which is when a company makes most of its money by recruiting new salespeople than from the products it sells. The company has vehemently denied these claims.
The company said in March, just after Ackman renewed some of his attacks, that it was facing an inquiry by the Federal Trade Commission.
Shares of the company fell $8.36 to close at $51.48 Thursday. Its stock is up roughly 34 percent since this time last year.