CNBC reports that The Federal Trade Commission [FTC] has opened a formal investigation into Herbalife Ltd. (HLF) following more than a year of scrutiny over its business practices. Shares of the company, which sells vitamins, shakes and other supplements, nosedived as much as 15% after being briefly halted.
After reiterating its willingness to fully cooperate with the FTC, Herbalife said it “welcomes the inquiry given the tremendous amount of misinformation in the marketplace.”
On Wednesday, hedge fund manager Bill Ackman, who has called the company a “massive pyramid scheme” and has placed a $1.16 billion short bet against it, stepped up his battle against Herbalife by accusing it of operating illegally in China.
“We are confident that Herbalife is in compliance with all applicable laws and regulations. Herbalife is a financially strong and successful company, having created meaningful value for shareholders, significant opportunities for distributors and positively impacted the lives and health of its consumers for over 34 years,” the company said in a statement.
Herbalife’s shares have recovered slightly in midday trading and are currently down $5.82, or 8.90%, at $59.67. HLF hit an intraday low of $54.59, or 17%, at one point after the FTC news hit the wires. Today’s range: $54.59 – $69.41.