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Several high-ranking Herbalife Ltd. members were contacted last week by US federal law enforcement officials who attempted to attain information about their business practices, a CNBC report citing familiar sources claims.
According to CNBC’s investigation, federal law enforcement agencies attempted to gather information on approximately 10 top Herbalife members and their business activities. While the identities of the company’s members haven’t been released, sources claim that Herbalife is already offering the aforementioned members aid in obtaining legal counsel. Until now, no information was released as to how many of the company’s members have actually decided on taking representation.
In response to the issue, Herbalife issues an emailed statement promising its full cooperation with authorities. The company is prepared to provide details as to share trading and business practices, the statement wrote, however, it did not comment on the report published by CNBC. Herbalife Ltd. insists on the integrity and correctness of the company’s business practices.
A spokesman for Herbalife, Alan Hoffman also addressed the situation, underlining William Ackman’s longstanding efforts of campaigning against Herbalife. According to Hoffman’s statements, the Los-Angeles based company hopes that his unfounded distortion campaign will finally be proven illegal. The hedge fund mogul together with Pershing Square Capital LP have been conducting active campaigns against the alleged pyramid scheme company since 2012 and since then, they revealed a whopping US$1 billion short bet against Herbalife.
Several other lawsuits involving Herbalife were also put to rest, the most recent of which was dismissed last month. It had alleged that the weight-loss and nutritional product maker had dishonestly portrayed itself as being a legitimate business while allowing its shareholders to lose money on account of its illegal pyramid scheme.
Both state and federal regulators (Securities and Exchange Commission included) are investigating the company which has repeatedly denied it being a pyramid scheme.
Of the company’s top shareholders, Bill Stiritz reiterated his lack of interest in becoming an active holder. Despite repeated discussions as to Ackman’s aggressive campaigns, Stiritz announced his change from active investor status to passive status in a filing on the 3rd of April. This shift caused avid speculation as to Stiritz’s possible intentions of selling his 8.2 percent stake in Herbalife.
“I am more resolved than ever in the legitimacy of the model,” he said, restating his conviction in his investment with the company.
The FTC’s investigation has had a toll on Herbalife stock, but shares are expected to rebound as soon as the investigation is completed.
Image Source: Herbalife
