Below are highlights from a report Fox Business Network’s senior correspondent Charlie Gasparino made regarding Herbalife Ltd. (NYSE:HLF) ’s FTC investigation and the company bracing for penalties.
Reposted with permission, full story can be found here.
FOX BUSINESS NETWORK’S CHARLIE GASPARINO REPORTS HERBALIFE EXECUTIVES “ARE BRACING FOR A RANGE OF PENALTIES” FROM THE FTC
On Herbalife executives telling investors the company will not be shut down by the FTC:
“Senior executives at Herbalife are telling investors that it’s all but certain that Federal Trade Commission will not shut down the company at the conclusion of its wide ranging investigation, but they expect some form of disciplinary action once the inquiry is complete. In recent weeks, senior executives have been making the rounds with Herbalife’s top investors and explaining that while the FTC’s investigation hasn’t concluded, they feel confident that Herbalife will avoid a corporate death sentence.”
On why executives are confident in avoiding a company shut down:
“Herbalife executives feel confident they will avoid a shut down because the FTC usually acts more quickly to shut down firms that the agency believes are operating in an illegal manner, investors who have been briefed by company officials say. Also such drastic action, the company is saying, rarely comes as a result of a civil probe.”
On Herbalife bracing for a range on penalties:
“Herbalife officials are bracing for a range of penalties, including fines and sanctions for failing to properly advise its distributors about the potential to make money from selling its nutritional products. Herbalife has already changed some of its business practices as they relate to distributors over hyping the profit making potential of selling Herbalife shakes and supplements. The FTC could also impose further restrictions on the way Herbalife distributors operate as part of any legal action, that could squeeze future company earnings.”