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Breaking News from CNBC's Scott Wapner: Herbalife contact by law enforcement agencies

Herbalife contacted by law enforcement agencies

http://www.cnbc.com/id/102561717

Scott Wapner | @ScottWapnercnbc CNBC.com

Federal law enforcement agencies recently contacted several Herbalife members for information about their own business practices, CNBC has learned.

According to sources familiar with the matter, the inquiries came last week and focused on the activities of 10 or so mostly top Herbalife members.

It's unclear exactly what law enforcement asked for, or the identities of the specific members in question.

Sources say the company has offered the members assistance in obtaining legal counsel though it's unclear how many have sought representation.

Separately, Herbalife has also received inquiries recently about irregular trading in its stock as part of a broader investigation into possible market manipulation. When asked for a comment on Sunday evening Herbalife spokesman Alan Hoffman provided CNBC the following statement:

"Bill Ackman has been engaged in a nearly three-year effort to drive down Herbalife's stock in order to enrich himself and his investors. There is reportedly an ongoing federal criminal investigation into his campaign against Herbalife for stock manipulation and law enforcement and regulators have recently sought information from Herbalife and others relating to that investigation as well as trading in Herbalife shares and allegations about our business practices. We are cooperating with these requests for information, remain confident in the integrity of our business practices, and are hopeful Ackman's long-term campaign of distortion will be found to be illegal."

Backing off?

In another matter, Herbalife's largest independent shareholder William Stiritz recently changed his filing status with the SEC, leading some to speculate that he may be interested in exiting his position. Reached by phone on Sunday evening, Stiritz said it is not the case.

"My motivation (for the filing) was to reflect my current relationship with the company. I have no intention of eliminating my position or making any major changes."

Stiritz also said his belief in Herbalife's business hasn't wavered.

"I've never done more due diligence on an investment than I did on Herbalife, and I have seen nothing to dissuade me from my original analysis," he said.

Stiritz told CNBC, like everyone else, he too was waiting for the FTC to rule on Herbalife, but was confident in the outcome.

"Black swans happen," said Stiritz, "but this one is so infinitesimally small that Herbalife is going to be shut down. There's nothing there."

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