Report: SEC Opens Inquiry Into Herbalife

NEW YORK (AP) – Published reports say the Securities and Exchange Commission has launched a probe into nutrition and weight loss company Herbalife Ltd., whose business model has come under attack by a prominent investor. The Wall Street Journal on Wednesday cited an unnamed person close to the probe.

The SEC and Herbalife both declined to comment. Los Angeles-based Herbalife has been grappling in recent weeks with questions about its business model, which uses a network of distributors to sell its products. Last month Pershing Square Capital Management’s William Ackman said he was shorting Herbalife stock after concluding the company was a pyramid scheme. In contrast, hedge fund manager Dan Loeb disclosed Wednesday the purchase of 8.9 million Herbalife shares. Herbalife is scheduled to hold an analyst meeting Thursday to address investor questions.