(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