Securities and Exchange Commission Chair Mary Jo White told Sen. Ed Markey (D-Mass.) that she can’t say anything about any investigation the regulator may — or may not — have under way regarding Herbalife.
“The Commission generally neither confirms nor denies the existence of an inquiry or investigation unless and until made a matter of public record in proceedings instituted before the Commission or in court,” White wrote in a letter to Markey, adding that “We appreciate your letter and the concerns you raised.”
“I can assure you that we are giving your concerns every consideration,” she added.
The SEC’s response came days after the Feb. 28 deadline Markey gave it and the Federal Trade Commission to respond to his request that they investigate the nutritional supplements company that critics say is a pyramid scheme.
Herbalife, which denies it is a pyramid scheme, previously disclosed that it was subject to an SEC inquiry about its business practices.
The SEC’s four-page letter came two days after the FTC responded to Markey.
It explained that the SEC looks at pyramid schemes as “a type of scam in which fraudsters may pitch as legitimate a business opportunity in the form of MLM [multilevel marketing] programs.” It also mentioned that the agency has issued an investor alert on the topic.
The SEC said, in response to one of Markey’s questions about compensation and turnover rates of Herbalife, that those would be “two of multiple facts” used to determine whether to undertake an investigation.
White also said that pyramid schemes do not have to be inordinately “complex” for the SEC to shut them down.
The SEC told Markey it keeps mum on investigations “to protect the integrity and effectiveness of our investigative process and to preserve the privacy of the individuals and entities involved.”
“I appreciate the SEC’s response to my letter, and I am currently reviewing it,” Markey said.