Herbalife Drops; Professor Asks SEC To Get Tough With Multilevel Marketers
Herbalife (NYSE: HLF) have fallen nearly three percent after a business professor urged the SEC to step-up its policing of the company, which some allege is a pyramid scheme.
Bill Keep, the business dean of the College of New Jersey, wrote the letter on June 16 and excerpts were published Tuesday by the New York Post.
Keep, described as a trial expert on pyramid schemes, singled out Herbalife for its recent annual report disclaimer that “there can be no assurance that our distributors will comply with our distributor policies and procedures.”
More broadly, Keep asked the SEC to undertake an ongoing review of multilevel marketers and suggested that regulators require companies to submit enforcement polices every five years.
Herbalife is currently targeted by investigations by the FBI, the SEC and Federal Trade commission concerning its multilevel marketing business model and possible insider trading.
Activist investor Bill Ackman is shorting the shares with a $1 billion investment and has long been a vocal opponent. Carl Icahn and George Soros have significant long positions.
Herbalife traded recently at $63.77, down 2.92 percent.
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