The head of Herbalife, William Ackman has called it a pyramid scheme. But his company is currently under the keen gaze of the Federal Bureau of Investigation. This news sent the stocks tumbling down 14%.
The FBI Herbalife probe has been going on for some time and it is expected to continue until some solid proofs are collected. While no arrests have been made, things at Herbalife look suspicious alright.
However, the FBI refused to comment any further on the matter when contacted. The private business ethics of the company seem to have been called into question. Within its ambit lay the recruitment policies of the firm.
The textual materials owned by Herbalife are under the FBI’s microscope as well. And while the FBI and Herbalife have not gotten in each other’s ways up until now, it is standard practice at the Bureau to snoop around without telling others about it.
The whole story began when the FTC requested Herbalife to pay closer attention to its working practices. The organizational policy of discrimination against ethnic minorities remained the main issue at hand.
And as far as Ackman’s $13 billion hedge fund is concerned, it came up a billion dollars short. This has the potential for fraudulent practice. The fact that Herbalife may get a complete pardon depends on several factors.
One Massachusetts resident especially bears grudges against the company. According to him, the company has a tendency to target those who are vulnerable and it literally fleeces them.
The future looks precarious for the Herbalife which has its prospects teetering on the verge of both success and failure. Either the FBI will act decisively especially if it notices any further hanky-panky or it will leave the matter alone. That is yet to be seen though.