BOSTON Jan 28 Herbalife shares fell as
much as 3.5 percent on Tuesday following a report that Canada's
top consumer regulator has launched a formal probe into
complaints that the nutrition and weight loss company runs a
The New York Post, citing unnamed sources, reported on
Tuesday that the Canadian Competition Bureau has interviewed
former Herbalife distributors and can now apply for "information
The report comes less than a week after U.S. Senator Edward
Markey called on two U.S. regulators, the Securities and
Exchange Commission and the Federal Trade Commision, to
investigate the company, sending the stock down 15 percent.
A spokesman for the Canadian authority declined to confirm
or deny any investigation. A spokeswoman for Herbalife said, "We
are unaware of any investigation and have not been contacted."
Herbalife's share price has been a battleground for
billionaire investors for more than a year. William Ackman has
accused the company of running a pyramid scheme, something
Herbalife vehemently denies, and bet $1 billion that its share
price will go to zero when regulators shut the company down. On
the other side, Carl Icahn and more recently William Stiritz,
are big owners who expect the stock price to go up.
Investors following the Herbalife story speculated that
Canada may be investigating the generation of sales leads. The
company prohibited "lead generation" methods to find new
distributors at the end of June, but Ackman, in a letter to
investors sent last year, said those practices, promoted by the
company's top distributors, are still being used.
Herbalife's Henderson said Canadian sales represent less
than 1 percent of total sales.
On Monday, Herbalife's share price climbed 6.7 percent when
Stiritz, Herbalife's fourth-largest investor, hired Timothy
Ramey, a well-known Herbalife analyst, to work for Post Holdings
, the company he runs. Stiritz' investment in Herbalife
was made for his private account and had nothing to do with
Post, the company said previously. But Ramey, who worked for
D.A. Davidson, will be director of strategic ventures at the
company Stiritz runs.
Since the start of the year, Herbalife's share price has
dropped 22.43 percent which helps shrink the paper loss Ackman's
$12 billion Pershing Square Capital Management has sustained on
the investment he made public in December 2012.
In late trading on the New York Stock Exchange, Herbalife
shares were down 2.7 percent to $62.31.
(with additional reporting by Caroline Valetkevitch and
Alastair Sharp, Reporting by Svea Herbst-Bayliss; Editing by