Herbalife Ltd. (NYSE:HLF) stocks took a beating this week after the Federal Trade Commission’s (FTC) probe was made public, and now there is growing concern that state attorneys general will also start their own probes, making life even more difficult for the company. But just as the multi-level marketing firm has an adversary in Pershing Square’s Bill Ackman, it may have an equally motivated ally in Carl Icahn.

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Herbalife worried that it could a ‘a year of hell’ for shareholders

“They are worried about state attorney generals [sic] coming in there and launching piggyback probes off this. It’s a huge worry inside the company,” said Charles Gasparino on the Fox Business News, who has contacts inside the company. “They are worried that this is going to be a year of hell for Herbalife shareholders that the stock is going to continue to get hit on these probes.”

Anyone who has been following the Herbalife Ltd. (NYSE:HLF) story knows that political activist groups such as the League of United Latin American Citizens (LULAC) and the Culinary Workers Union have been pressuring state attorneys general to investigate Herbalife, but they haven’t had any traction until now. Herbalife management doesn’t have any more information on what attorneys general are planning than the rest of this, but after getting hit with a civil investigative demand (CID) you have to imagine that they are planning for the worst and digging in for the long haul. The question, as always, is whether the falling stock price signals a sinking ship or an opportunity to buy.

Icahn as a PR force

Gasparino says that he has also heard rumors that the reason Icahn may be getting more seats on the Herbalife Ltd. (NYSE:HLF) board is so that the activist investor could take a central role by “being a public relations force.” Gasparino says that he hasn’t been able to confirm the rumor with Icahn directly, but the move would make sense. Icahn has been long on Herbalife for a long time, and has publicly challenged Ackman’s claims that Herbalife Ltd. (NYSE:HLF) is a pyramid scheme.

It would be in character for Icahn to get directly involved in the dispute to try to protect the company and his investment, and based on the short squeeze we saw last summer he probably welcomes the opportunity to go toe-to-toe with Ackman, but we’ll have to wait for the company’s next shareholder meeting to find out for sure.