Herbalife denies any investigation by FTC

NEW YORK (AP) -- Herbalife on Monday denied a New York Post report that it's the target of a law enforcement investigation, and the Federal Trade Commission said the report may have stemmed from the way it worded "boilerplate language" in a letter to the newspaper.

The FTC, responding to a Freedom of Information Act filing by The New York Post, released documents containing 192 complaints against Herbalife that it received over the past seven years. Complainants included people who said they thought they were going to be interviewed to be nutrition coaches but were instead given sales pitches on Herbalife vitamin and supplement products, and others who said they had trouble getting refunds.

In releasing the documents to the newspaper, the FTC's boilerplate language said that it didn't have to disclose "information obtained by the commission in a law enforcement investigation." However, in this case the reason some material was redacted was because the agency can't disclose "any material reflecting a consumer complaint obtained from a foreign source if that foreign source has requested confidential treatment," FTC spokesman Frank Dorman confirmed in an email Monday.

The FTC cannot confirm or deny whether any government agency is investigating Herbalife," Dorman said in an emailed statement.

Herbalife, which has been defending itself against a hedge fund manager's accusation that it is a pyramid scheme, didn't deny that the complaints were filed but said that it has no knowledge of any investigation.

"Other than the voluntary dialogue with regulators, which we communicated on our January investor day, we are unaware of any other regulatory interest and/or investigation. We are demanding a correction from the NY Post," the company said in a statement.

The Wall Street Journal had reported in January, citing unidentified sources, that the Securities and Exchange Commission had opened an inquiry into Herbalife Ltd.

Herbalife's stock has had a wild ride in the past few months as its business became a point of contention between several prominent Wall Street figures. In December, hedge fund manager William Ackman alleged that Herbalife was a pyramid scheme and said that he was shorting the stock. Short-sellers make money when the shares they're betting against decline. Greenlight Capital's David Einhorn, one more prominent Wall Street figure, had raised concerns about Herbalife's business back in May.

Herbalife tried to refute Ackman's accusations, holding an analyst and investor meeting in January that detailed how its business operates and who its customers are. Ackman replied that Herbalife "distorted, mischaracterized, and outright ignored large portions" of his presentation.

Then, in a blowup on live television last week, Ackman and billionaire activist investor Carl Icahn traded barbs over an old investment deal and Ackman's position in Herbalife. Speculation is rife that Icahn has a minor stake in Herbalife, but he has refused to comment on whether or not he holds a position.

Yet another investor, Dan Loeb of Third Point LLC, has disclosed an 8.2 percent stake in Herbalife, a vote of confidence in the company.

Herbalife's stock dropped nearly 13 percent to a low of $30.60 during Monday's session on the report, but pared its losses to finish the day up 44 cents at $35.51. The shares have lost about 18 percent since Ackman disclosed in December that he was shorting the stock.