Friday afternoon after a report about Herbalife was made public, Herbalife shares plummeted down and at the end of the day they were 14% lower. The news about this first surfaced in the Financial Times where it was stated that a hedge fund manager claimed Herbalife operates as a pyramid scheme.
The company has defended itself against such claims and enforced the idea that the Herbalife business model is no different than the one used by many other multi-level marketing companies. The FBI and Manhattan's Attorney office have been investigating Herbalife for many months as it was also confirmed yesterday by a law enforcement official.
This is not the first time the company's stock price has gone down in the light of news like this. Only last month Herbalife's shares plunged after it was revealed that the company was the subject of a civil inquiry by the FTC.