In a move that is fast snowballing into a major show-down for Herbalife Ltd. (NYSE:HLF), members of the multi-level organization were contacted by federal law enforcement agencies. According to news reports, by CNBC, the members were queried about their business practices. CNBC sources revealed that the members belonged to the top-level and totaled roughly 10 members. Queries raised were about the nature of the activities that the Herbalife members were involved in.
Thus far, there is no clear indication of the questions that the members were asked or the identity of the members who were questioned. Herbalife Ltd. (NYSE:HLF) claimed that it had already offered the members who were subject to the investigations with legal counsel. However, it is not clear if the members sought to avail such facilities.
Herbalife, in the meanwhile, has also been accused of manipulating or indulging in irregular trading so as to heighten the stock. Spokesperson for Herbalife, Alan Hoffman deferred from the accusations and responded to CNBC stating that Bill Ackman’s allegations were based on profits. The spokesman noted that the hedge fund stalwart’s attempts to bring better profits to himself and his investors, had led to over three years of baseless accusations.
In turn, Alan Hoffman claimed that Bill Ackman and his company were under criminal investigations by the federal agency for his alleged role in manipulating Herbalife stock and campaigning against it. Hoffman noted that the investigations by federal agencies related to investigation related to trading in Herbalife shares, besides business procedures. He affirmed that Herbalife is offering its full co-operation and is confident that the integrity of his company would remain intact.
Hoffman concluded that, the investigations would lead the federal agencies to decide that Ackman’s campaign was to distort facts and illegal in nature. Ackman in the past two years has been alleging that Herbalife Ltd. (NYSE:HLF) was running a pyramid business, affecting ‘vulnerable population’’.