Shareholder litigation has been filed against Herbalife Ltd. and its CEO, CFO, COO, and president, claiming that they “made materially false and misleading statements regarding the Company’s business, operational and compliance policies” in violation of securities laws. Awad v. Herbalife Ltd., no. 14-2850 (U.S. Dist. Ct., C.D. Cal., filed April 14, 2014). information about the company’s efforts to lobby Congress in light of concerns over its direct-sales practices appears in issue 21 of this Report.
Claiming that shareholder investments have lost value as various news stories have surfaced about accusations that the nutritional supplement and personal care products company operates as a pyramid scheme, the plaintiff alleges that the defendants deceived the investing public through a scheme that artificially inflated the market price of its securities. the complaint cites an April 11, 2014, Financial Times news item on a purported Department of Justice and Federal Bureau of investigation criminal probe of the company, after which Herbalife stock allegedly fell more than 13 percent. the company has released a statement indicating that it has no knowledge of any ongoing criminal investigation. See Law360, April 11, 2014.