Herbalife (HLF), the nutrition company that hedge fund manager Bill Ackman has accused of being a pyramid scheme, revealed Thursday that it was being probed by Illinois Attorney General’s office.
The statement comes as the Illinois AG Office’s consumer fraud bureau said it has received 12 complaints about the company, The Wall Street Journal reports citing a press official for the state’s AG Lisa Madigan.
Herbalife issued the following statement:
“We have more than 15,000 members and many more thousands of satisfied customers in Illinois….We are confident in the integrity of our longstanding business and the Company’s compliance with applicable laws and regulations.
We look forward to working with the Illinois Attorney General’s office to resolve the consumer complaints it has received.”
Madigan’s office is just the latest agency to begin an investigation of Herbalife. The FTC, FBI and New York State Attorney General Eric Schneiderman have previously been reported to be investigating consumer complaints about the nutritional supplement company.
The probes mark an achievement for Pershing Square’s Ackman, who in December 2012 placed a whopping $1 billion short against Herbalife’s shares, with a price target of $0. While so far that bet has turned out to be a bad one, he believes the Los Angeles-based company, which markets its products through 3 million distributors in more than 90 countries, misrepresents sales figures and sells a commodity product at inflated prices.
Herbalife, which recorded sales growth of 18% to $4.8 billion last year, has repeatedly denied Ackman’s allegations, which have drawn criticism from billionaire investor Carl Icahn.
Mr. Icahn, who has amassed a 17% stake in Herbalife, believes the company is undervalued.
Herbalife shares fell about 2 percent following the news, to close at $55.10, reversing earlier gains.
HLF more than doubled last year and it has gained almost 500% in the last five. The ticker however, has retreated by about 30% so far in 2014.