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| Herbalife to pay $200 million to settle with FTC: WSJ |
(Reuters) - Weight-loss products maker Herbalife Ltd will pay $200 million to avoid being classified as a pyramid scheme under a settlement with the Federal Trade Commission, the Wall Street Journal reported, citing people familiar with the matter.
Herbalife shares jumped nearly 12 percent to $66.58 in premarket trading on Friday, and looked set to open at a near two-year high.
The settlement, expected to be announced Friday, will require the company to improve disclosures about its distributors, the people told the Journal.
The settlement will also tie distributor compensation to actual retail sales and force the company to collect receipts, according to the report.
The FTC opened a probe of Herbalife in 2014 following allegations by hedge fund manager William Ackman that it had a fraudulent business model that he compared to a pyramid scheme.
Ackman's Pershing Square Capital Management unveiled a $1 billion short bet against the company in 2012.
Ackman said on Thursday that he was still betting against Herbalife shares and that the FTC probe was unlikely to end well for the company as its business model is not built upon actual retail sales.
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