SEC Looks Into Soros Herbalife Investment

Aug 29 2013 | 12:06pm ET

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.

In Depth

Financial Industry Blockchain Consortium R3 To Open-Source Platform Code

Oct 20 2016 | 9:03pm ET

Bitcoin's blockchain technology has spawned a flurry of activity among fintech startups...


U.S. Trust's Beard: The Rapid Growth of the Art Lending Industry

Oct 7 2016 | 10:55pm ET

Alternative investment managers have emerged as some of the most significant art...

Guest Contributor

Hedge Fund Marketing – Tips for Your Initial Sales Meeting

Sep 29 2016 | 5:46pm ET

There are two main goals a hedge fund should have for an initial in-person sales...