Herbalife reveals Justice Department sought information about its business practices and members
According to Nutritional drink company Herbalife, the Department of Justice has asked for information regarding its business practices and its members.
The company said in a regulatory filing regarding its latest financial results, "The Department of Justice recently sought information from the company, certain of its members and others regarding allegations being made about the business practices of the company and its members".
Herbalife accepted a 'federal criminal investigation' in a statement to CNBC last month. However, the company didn't talk about DOJ or questions regarding its members. According to the statement, the investigation was related to concerns of stock manipulation by billionaire Bill Ackman. He has been 'shorting' the stock, or looking for profit from the stock's decline.
According to Herbalife spokesman Julian Cacchioli, this was covered in April and CNBC piece was related to federal regulators, of which DOJ is one. In the face of the scrutiny, shares of Herbalife increased on the company's hopes for growth in China, even when overall revenues of the company dropped.
After the company said that sales in China rose 21% in the three months ended in March to $164.2 million, the stock increased 15% in late trading, or $5.91 a share to $46 a share. Since the company expected growth in China, it helped the company increase its profit expectations for the year to $4.60 a share from an earlier high of $4.50 a share.
On the whole, revenues dropped 12.4% to $1.1 billion amid decreasing sales in North America and Latin America, together with Mexico. The company said that it was adversely affected as a result of unfavorable currency exchange rates.