Herbalife Ltd,, the company that hedge fund manager Bill Ackman has accused of being a pyramid scheme, is being probed by the Federal Bureau of Investigation, according to a person familiar with the matter.
Federal authorities are looking into the company's marketing practices, said the person, who asked not to be identified because the investigation is private. The Financial Times reported the probe earlier, saying the FBI and the U.S. Department of Justice were involved.
Herbalife has repeatedly denied Ackman's accusations that the company is an illegal pyramid scheme that misleads distributors, misrepresents sales figures and sells a commodity product at inflated prices. Billionaire investor Carl Icahn has come to Herbalife's defense and became its largest shareholder, with a 17% stake.
The company said Friday in a statement that it has no knowledge of any investigation by the FBI or the Justice Department and hasn't received requests for information from either agency. Herbalife disclosed last month that the Federal Trade Commission has started a civil probe into its practices.
Shares of Cayman Islands-based Herbalife dropped 14% to $51.48 for the biggest one-day decline since Dec. 21, 2012.
Representatives of Icahn and Ackman didn't immediately respond to requests for comment. Jim Margolin, a spokesman for Manhattan U.S. Attorney Preet Bharara, declined to comment.