The Securities and Exchange Commission has launched a probe into Soros Fund Management's investment in nutritional supplements company Herbalife.
An SEC enforcement lawyer spoke with Bill Keep, the dean of the College of New Jersey and an expert on pyramid schemes, about a meeting he had with Soros fund manager Paul Sohn on June 26, the New York Post reports. Sohn is leading the family office's investment in the company.
The conversation occurred just days after Pershing Square Capital Management's William Ackman referred Soros' Herbalife buy to the SEC. Ackman, who has called Herbalife a pyramid scheme and taken a $1 billion short against it, suggested that there might be something amiss about the timing of Soros' investment, the "idea meetings" Soros representatives held with other potential investors and whether the firm bought the shares as part of a common group.
Soros owns 4.9% of Herbalife, which is its third-largest investment.
According to the Post, Sohn asked Keep—who has ties with the Federal Trade Commission—about the likelihood of an FTC probe. Keep told him that such an investigation would be "expensive and time-consuing."
Keep's opinion on the likelihood of a probe has been changing: After his meeting with Sohn, Keep said that an investigation was "not probable at this point," but now believes that action is more likely after Ackman said that he has made "material" progress with regulators.