In Brief: Herbalife And FTC, Reckit And K-Y, DSM In CMO JV

The Federal Trade Commission could ask Herbalife Ltd. to explain its business model under an inquiry called a “civil investigative demand” the commission submitted to the multilevel marketer of nutritional and weight loss supplements. The Los Angeles firm on March 12 announced it received a CID from FTC’s Bureau of Competition and “it welcomes the inquiry given the tremendous amount of misinformation in the marketplace.” According to FTC, CIDs are used to obtain existing documents or oral testimony, but also to require a recipient to “file written reports or answers to questions.” The agency contacted Herbalife after Sen. Edward Markey, D-Mass., asked for an inquiry into whether the firm’s business is a pyramid scheme; Markey also asked for an investigation by the Securities and Exchange Commission, which declined to comment. In addition to congressional and regulatory scrutiny, Herbalife for more than a year has been a target for criticism by investor William Ackman, who is short-selling the firm’s stock, betting it eventually would fall to zero, and repeatedly has argued he believes the company is running a pyramid scheme ([A#05140224008]).