Explaining Southern California's economy

Is the federal government investigating Herbalife?


A worker cleans the logo on the Herbalife sign as finishing touches are put on the company's building in Torrance, Calif. A report from the New York Post about an FTC investigation of the company is being questioned.

It initially looked as if the New York Post had broken a story this morning about the Federal Trade Commission (FTC) investigating L.A-headquartered Herbalife for possibly breaking some laws.

The basis of the NYPost story was a Freedom of Information Act (FOIA) request the paper submitted last year, after hedge fund manager Bill Ackman made a massive presentation accusing Herbalife of running a pyramid and announcing a $1 billion-plus bet against the company's stock. 

The NYPost was attempting to determine how many complaints had been submitted to the government involving so-called "multi-level marketing" companies, of which Herbalife is one. Something interesting happened when the request came back:

The FTC redacted some sections, saying it didn’t have to divulge “information obtained by the commission in a law enforcement investigation, whether through compulsory process, or voluntarily ...”

Other complaints contained a note referring to a “pending law enforcement action.” The FTC did not say whether the action was civil or criminal.