October 6, 2014 / 10:03 AM / 3 years ago

Exclusive: Herbalife hires former U.S. regulator to head compliance team

A Herbalife logo is shown on a poster at a clinic in the Mission District in San Francisco, California April 29, 2013. REUTERS/Robert Galbraith

WASHINGTON (Reuters) - Herbalife Ltd, the marketer of weight-management products, energy drinks and nutrition supplements that has come under investigation by the Federal Trade Commission as well as other agencies, has hired a former FTC official as its chief compliance officer.

Herbalife (HLF.N) said it named Pamela Jones Harbour, who was an FTC commissioner from 2003 to 2010, as senior vice president, global member compliance and privacy. She will be in charge of the company’s 300-member compliance team and coordinate global compliance.

Herbalife earlier this year said it was being investigated by the FTC following allegations that the company was a pyramid scheme.

Herbalife has been under fire from billionaire investor William Ackman, who was the first to claim that the company is a pyramid scheme. His $14.7 billion hedge fund Pershing Square Capital Management unveiled a $1 billion short bet against Herbalife in December 2012.

Herbalife has rejected the allegations, and has asked the U.S. Securities and Exchange Commission to investigate whether short-sellers illegally manipulated the market.

Herbalife’s share price hit $81 briefly in January but has struggled to get about $55 over the past two months. The shares closed on Friday at $44.61?

One of Harbour’s challenges will be to ensure that far-flung distributors selling Herbalife products, often out of small centers with small staffs, steer clear of exaggerating claims about Herbalife’s protein and vitamin shakes.

“I will develop and enhance training programs, develop and ensure consistent enforcement of rules,” she said. “The challenge that I have is making sure that (distributors) don’t make claims above and beyond what they should make.”

Harbour said she has been using Herbalife’s Formula 1 shake mix since 2004.

Companies operating in the United States are not allowed to advertise that products will help a user lose weight, or make other health claims, unless the statement is backed up by science.

Harbour, an antitrust expert, is also a veteran of the New York attorney general’s office.

Harbour will also work on privacy and cyber security matters for Herbalife.

Reporting by Diane Bartz; Editing by Leslie Adler

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