By Svea Herbst-Bayliss
BOSTON (Reuters) - Massachusetts Senator Edward Markey is asking for more information about the business practices of Herbalife Ltd, becoming the most prominent lawmaker to call for action after an activist hedge fund manager accused it of running a pyramid scheme.
Herbalife shares tumbled 15 percent after Markey said Monday he had written to the U.S. Securities and Exchange Commission (SEC), the Federal Trade Commission and to Herbalife itself to try to obtain more information.
The battle for the future of Herbalife has been raging for over a year after activist investor William Ackman accused the company of running a pyramid scheme, a charge the nutrition company vehemently denies. Since then prominent investors, including Carl Icahn, have lined up against Ackman, making Herbalife shares some of the most closely watched on Wall Street.
Markey wrote to SEC Chair Mary Jo White "I request that you investigate the company's business practices yourself to confirm that the company is acting in accordance with the federal securities laws under the authority of the Commission," according to a letter dated January 22 released by his office on Monday.
Markey said he is making his requests because constituents say they have lost thousands of dollars in life savings in having signed up to become distributors.
"Herbalife may be a purveyor of health and wellness products, but some of its distributors are suffering serious economic ill-health as a result of their involvement in the company. I have serious questions about the business practices of Herbalife and their impact on my constituents, and I look forward to receiving responses to my inquiries," he said in a news release.
(Reporting by Svea Herbst-Bayliss; Editing by Richard Valdmanis and Meredith Mazzilli)