Responses to two FOIA requests suggest Herbalife may be under investigation by the SEC

Herbalife has been doing business in the shadow of regulatory probes for quite some time now, and it doesn’t look like regulators will be wrapping up their investigations anytime soon. The concern on Wall Street has been about the Federal Trade Commission’s investigation of the nutritional supplements company.

Herbalife Ltd. HLF

However, the folks at Probes Reporter say there continues to be signs that the Securities and Exchange Commission is also investigating Herbalife. Unfortunately for investors though, the company has not disclosed an SEC investigation.

New data about Herbalife

According to Probes Reporter, there’s new data that “re-affirms risk of SEC investigative activity.” The website reported that Herbalife included what it calls a “stealth disclosure of an SEC probe” in a regulatory filing in February 2013.

The company told investors it had requested a meeting with the Division of Enforcement at the SEC. It also stated that there were some requests for information and documents in connection with the meeting. However, investors have received no official update from Herbalife since then.

Investigators at Probes Reporter believe the SEC first notified Herbalife that it was investigating and that Herbalife then requested the meeting. They say the reason companies use what they call a “steal disclosure” is usually because they think the investigation is material enough to require that it be disclosed but they don’t want any negative reaction in the markets that could come about as a result of disclosing the investigation.

Concerns about Herbalife

Then in November 2014, Herbalife referenced the pyramid scheme allegations raised by activist investor Bill Ackman, who started shorting the company in late 2012. The company also said that it would disclose any investigation if it “is or becomes material.”

Probes Reporter states that it received a letter dated Dec. 22, 2014 providing information from the SEC that suggested Herbalife had an undisclosed SEC investigation. The website adds that it had received a similar response in May 2014 as well. Both were responses to requests Probes Reporter sent under the Freedom of Information Act.

The website’s investigators do believe that the SEC’s investigation of Herbalife will end just as most of them usually do, with regulators not recommending any “enforcement action.” They also point out that investors usually decide this means that the company was cleared of all allegations, but the SEC has made it clear that just because it does not order any enforcement actions, it doesn’t mean a company was cleared.

As of this writing, shares of Herbalife were down by 2.41% to $32.80 per share.