N.Y. Attorney General probing Herbalife: report

Tue Apr 15, 2014 11:00am EDT

The Herbalife logo is seen on a building housing some of their offices in downtown Los Angeles, California April 28, 2013. REUTERS/Lucy Nicholson

The Herbalife logo is seen on a building housing some of their offices in downtown Los Angeles, California April 28, 2013.

Credit: Reuters/Lucy Nicholson

(Reuters) - New York Attorney General Eric Schneiderman is investigating nutrition and weight loss company Herbalife Ltd (HLF.N) over claims it is a pyramid scheme, the New York Post reported late Monday.

Shares fell 3.6 percent to $51.81 in early trading.

A spokesman for Herbalife declined to comment directly on the Post's report but said in an e-mailed statement that "Herbalife takes its disclosure responsibilities seriously."

Representatives for Schneiderman's office did not immediately respond to a request for comment.

The New York Post said that at least two whistleblowers have come forward and given Schneiderman's investigators sworn testimony, citing unnamed sources.

Herbalife was hit with a shareholder class action lawsuit Monday accusing the multilevel-marketing company of failing to disclose to investors that its operations were based on a pyramid scheme. The company on Monday said the complaint was without merit.

Last week, sources familiar with the matter told Reuters that the U.S. Federal Bureau of Investigations was probing Herbalife. A month before that, Herbalife confirmed that the Federal Trade Commission had issued a civil investigative demand to the company to look more closely at how it works.

The company has steadfastly denied running a pyramid scheme, where distributors earn more money for recruiting new members into the scheme than they do by selling products to consumers.

(Reporting by Phil Wahba in New York; Editing by James Dalgleish)

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Comments (2)
BA117 wrote:
It took them long enough….

Apr 15, 2014 6:33pm EDT  --  Report as abuse
flowers21 wrote:
I am confused or maybe just curious. Why did it take so long to figure this out? It seems that another weightless coffee business has the same type of business model. On their website they tell interested people to sign-up 3 people up within 30 days (makes you a supervisor). Why is Herbal-Life targeted? not sure what draws the line. I think if the consumers knew this info they would make wiser decisions. If they see this visible company A doing something like company B then it must be legal or ok.

Apr 15, 2014 6:55pm EDT  --  Report as abuse
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