Weight-loss products maker Herbalife agrees to pay $200 million and restructure its U.S. business under a settlement with the Federal Trade Commission. Fred Katayama reports.
Weight-loss products maker Herbalife settled a probe over its alleged pyramid scheme with the U.S. Federal Trade Commission. The company agreed to pay a $200 million fine and change the way it does business. It will now have to base rewards for salespersons on retail sales rather than on recruiting new distributors. FTC Chairwoman Edith Ramirez: (SOUNDBITE) EDITH RAMIREZ, CHAIRWOMAN, FEDERAL TRADE COMMISSION, (ENGLISH) SAYING: "Today's $200 million settlement, one of the largest consumer redress settlements obtained by the Federal Trade Commission, will provide compensation for many of the company's distributors for the losses they suffered." Herbalife's shares jumped more than 14 percent on the news of the settlement. The FTC opened a probe into Herbalife in 2014 following allegations by hedge fund manager Bill Ackman that it was a fraudulent pyramid scheme. But Herbalife avoided being labeled a pyramid in the settlement. And the stock's spike dealt a blow to Ackman, who has been betting against the company for years. Herbalife said its board had cleared the way for another billionaire investor, Carl Icahn, to boost his stake to 35 percent. Jennifer Ablan covers the story for Reuters. (SOUNDBITE) JENNIFER ABLAN, EDITOR IN CHARGE, REUTERS, (ENGLISH) SAYING: "That has a lot of analysts speculating what's next. Is the company going to be taken private by Icahn Enterprises? So, we will see from there, but, from the look of the stock price, it looks like that could be one avenue that a lot of investors are embracing." Icahn said on Friday it was time for the company to consider strategic opportunities, including potential mergers with competitors.