(Adds details on William Stiritz, background, shares)
April 6 (Reuters) - U.S. federal law enforcement agencies contacted several top Herbalife Ltd members last week seeking information on their business practices, CNBC reported, citing sources familiar with the matter.
Herbalife’s shares fell as much as 4.1 percent in early trading on Monday.
The inquiries are focused on the activities of about 10 top Herbalife members, CNBC said, citing sources. The company is offering members assistance in obtaining legal counsel, although it is unclear how many have opted for representation, CNBC said.
The identities of the members and what law enforcement asked them is unclear, CNBC said. (cnb.cx/1C5lFr0)
Herbalife said in an emailed statement that it was cooperating with the authorities’ requests for information on its business practices and the trading of its shares.
The company did not comment on the CNBC report, but said it had confidence in the integrity of its business practices.
Herbalife’s largest independent shareholder, William Stiritz, told CNBC in an interview on Monday that he had no intention of eliminating his position in the company or “making any major changes”.
Stiritz, the former chief executive of cereal maker Post Holdings Inc, held an 8.12 percent stake in Herbalife as of Feb. 27, according to Thomson Reuters data.
Stiritz told CNBC that he was waiting for the Federal Trade Commission (FTC) to rule on Herbalife and was confident of a positive outcome.
Hedge fund mogul William Ackman and his Pershing Square Capital Management LP have campaigned against Herbalife since December 2012, when they revealed a $1 billion short bet against the Los Angeles-based company. Herbalife has long denied it is a pyramid scheme.
Federal and state regulators, including the Securities and Exchange Commission and the FTC, are investigating the company.
Herbalife exclusively sells its products through a network of independent distributors or “members”, who also earn through commissions on sales to other recruited members.
Ackman has claimed that Herbalife earns mainly by recruiting members rather than through sales to customers. Herbalife has rejected the allegations.
“(We) are hopeful Ackman’s long-term campaign of distortion will be found to be illegal,” Herbalife spokesman Alan Hoffman said in the statement.
Last month, Herbalife won the dismissal of a lawsuit that claimed the maker of weight-loss and nutritional products fraudulently portrayed itself as a legitimate company.
Herbalife’s shares were down 3.2 percent at $41.51 on the New York Stock Exchange. (Reporting by Rama Venkat Raman in Bengaluru; Additional reporting by Shailaja Sharma; Editing by Muralikumar Anantharaman and Simon Jennings)