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Herbalife hit with investor lawsuit over 'pyramid' claims

Published on Apr 15, 2014 12:09 PM

(Reuters) - Herbalife was hit with a shareholder class action lawsuit Monday accusing the multilevel-marketing company of failing to disclose to investors that its operations were based on a pyramid scheme.

The lawsuit, filed in federal district court in Los Angeles, came three days after news emerged that the FBI was investigating the nutrition and weight loss company.

The case appeared to be the first shareholder lawsuit to emerge since hedge fund manager William Ackman in December 2012 unveiled his US$1 billion short position against Herbalife and said he considered it a pyramid scheme.

Herbalife contends it is a legitimate multilevel marketing company and has sought to counter the claims by Ackman, who runs the US$12 billion hedge fund Pershing Square Capital.

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