SEC Investigating Herbalife

Accused by some of being a massive pyramid scheme


The Securities and Exchange Commission is adding to the scrutiny of Herbalife, the nutritional supplements company that has been a favorite target of prominent hedge fund short-sellers.

The agency's enforcement unit has opened an investigation into the company, according to a person briefed on the matter. The inquiry, which is being run out the S.E.C.'s New York office, is likely to examine the company's sales practices. Herbalife operates through a network of independent resellers who are incentivized to recruit others.

The agency has not decided whether to take action, and Herbalife has not been accused of any wrongdoing. A spokeswoman for Herbalife was not immediately available for comment. The news of the inquiry was reported earlier by The Wall Street Journal.