The Federal Trade Commission confirmed it is investigating nutrition company Herbalife after allegations the company is running an illegal pyramid scheme.
The accusations come from Pershing Square hedge fund billionaire Bill Ackman, who in Dec. 2012 bet $1 billion on the stock’s collapse and demanded the company’s business practices be investigated. (Via CNN)
On Tuesday, Ackman also claimed Herbalife violated Chinese labor laws. (Via Business Insider)
Herbalife has maintained its innocence and released a statement addressing the FTC investigation.
“Herbalife welcomes the inquiry given the tremendous amount of misinformation in the marketplace, and will cooperate fully with the FTC. We are confident that Herbalife is in compliance with all applicable laws and regulations.
USA Today reports Ackman’s efforts to bring down Herbalife is part of a long-running feud with billionaire investor Carl Icahn, who went as far as to buy a 17 percent stake in the company to help the stock weather Ackman’s attacks.
“We had the billionaire brawl between Ackman and Carl Icahn, the short versus long. It will be an unfolding drama and Herbalife believes their business practices are sound.” (Via CNBC)
Many media outlets, including The New York Times, report this FTC investigation shows how Washington is slowly becoming a battleground for financial giants on Wall Street.
“...whose interest in influencing public policy is driven primarily by a desire for profit — part of an expanding practice in the nation’s capital, with corporations, law firms and lobbying practices establishing political intelligence units to gather news they can trade on.” (Via The New York Times)
Herbalife experienced a small drop in its share price Wednesday. The FTC probe is expected to take six months to a year.