The FBI has opened an investigation into Herbalife Ltd., makers of the nutrition and weight loss products that hedge fund manager William Ackman famously called a "pyramid scheme."
According to Bloomberg News
, shares of the Cayman Islands-based company tumbled 14 percent last week after the probe was revealed, It was the biggest single-day sell-off since Ackman's three-hour presentation on the company in December of 2012. His New York-based firm, Pershing Square Capital Management LP, has bet $1 billion against Herbalife's shares in short sales.
Agents from the FBI and U.S. Attorney's Office in Manhattan have been investigating for some time, and Reuters confirmed
that former Herbalife distributors said they've been contacted by agents interested in learning more about the company's network of independent distributors used to market and sell the branded products.
Urgent: Do You Approve Or Disapprove of President Obama's Job Performance? Vote Now in Urgent Poll
Many financial analysts including Meredith Adler, an analyst for Barclays Plc in New York, have cautioned that sometimes these types of probes don't turn up anything. She also pointed out that the company has not been issued any subpoenas thus far in what appears to be a weeks- or possibly months-old investigation.
Billionaire Carl Icahn, who has become the company's largest shareholder after it spent more than a year denying Ackman's accusations, has yet to comment on the investigation. Ackman has also remained silent thus far.
Herbalife reported $4.8 billion in sales last year across more than 80 countries including its fastest growing market, China.
In January, Senator Edward Markey called on the Securities and Exchange Commission and Federal Trade Commission to investigate the company after civil rights groups accused Herbalife of targeting minorities. Roughly a month later the FTC opened a civil investigation.
Urgent: Assess Your Heart Attack Risk in Minutes. Click Here.
© 2015 Newsmax. All rights reserved.