The shares GNC Holdings Inc plummeted more than 14% to $34.51 per share after the Oregon Department of Justice filed a lawsuit against the company. Earlier today, the trading on the company’s stock was halted due to volatility. In fact, the stock traded as low as $31.94 per share.
Allegations against GNC Holdings
Oregon’s Attorney General Ellen Rosenblum filed a lawsuit against GNC Holdings on allegations that the company is selling nutritional and dietary supplements that contain the illegal ingredients picamilon and BMPEA.
GNC Holdings violated the Oregon Unlawful Trade Practices ACT (UTPA) by misrepresenting some of its products as lawful dietary supplements, according to the complaint of the Attorney General.
According to the Attorney General, the products that were misrepresented are “actually unapproved drugs that may not be lawfully sold in the United States as a dietary supplement.”
Additionally, the Attorney General alleged that GNC Holdings sold products labeled containing botanical acacia rigidula that were added with unlabeled BMPEA. The company allegedly sold thousands of units of products containing picamilon or BMPEA that were falsely labeled as a dietary supplement.
“It is scary to know that certain products sold by GNC contain an ingredient that is not even labeled—let alone approved in the United States. When Oregonians buy a dietary supplement, they deserve to know that the ingredients in the products are safe and comply with the law. There are 25 GNC stores in Oregon that sold thousands of these products over the span of a couple of years,” said Atty. General Rosenblum.
GNC Holdings’ response
GNC Holdings issued a response indicating that the allegationof the Oregon Attorney General was baseless and it would defend itself in court.
The company said,”The claims made by the Oregon Attorney General are without merit, and GNC intends to vigorously defend against these allegations. In response to FDA statements regarding the regulatory status of BMPEA and picamilon, GNC promptly took action to remove from sale all products containing those ingredients.”
Picamilonis a synthetic chemical used as a prescription drug in some countries to treat neurological conditions. The United States does not approve the chemical.
BMPEA is a powerful stimulant and amphetamine-like substance. Products containing this chemical are sometimes sold as weight loss or performance enhancing nutritional supplements.