Report: SEC opens inquiry into Herbalife

Published on NewsOK Modified: January 9, 2013 at 4:13 pm •  Published: January 9, 2013
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NEW YORK (AP) — Questions over Herbalife Ltd.'s business model have pummeled the nutrition and weight loss company's shares and reputation in recent weeks. Now the company is reportedly the target of an SEC inquiry.

The Wall Street Journal reported on Wednesday that the Securities and Exchange Commission has launched a probe into the Los Angeles company. The newspaper cited an unnamed person close to the inquiry.

Representatives for the SEC and Herbalife both declined to comment.

The SEC conducts inquiries privately and reviews findings before determining whether to take any enforcement actions, if any.

Herbalife has been grappling with questions about its business model, which involves using a network of distributors to sell its products. On its website, the company describes itself as "a global nutrition company that has helped people pursue healthy, active lives since 1980."

Last month Pershing Square Capital Management's William Ackman said he had been shorting the stock for several months upon concluding that the company is a pyramid scheme.

Herbalife vehemently denied that it is a pyramid scheme, suggesting that Ackman was trying to illegally manipulate its stock price to make money. It said in a statement at the time that Ackman's comments were "a malicious attack on Herbalife's business model based largely on outdated, distorted and inaccurate information."



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