By Megan R. Wilson - 10/06/14 11:14 AM EDT
Herbalife has hired a former federal regulator to run its compliance program as it deals with allegations of running a pyramid scheme.
Pamela Jones Harbour, who served at the Federal Trade Commission (FTC) from 2003 to 2010, has been named the company’s senior vice president of global member compliance and privacy, according to media reports.
Shortly after the FTC announced its investigation, the FBI began looking into how the direct-selling company recruits new distributors.
Herbalife is best known for its meal-replacement shakes and dietary supplement products. Harbour says she has been a Herbalife customer since 2004, according to Reuters, favoring the company’s Formula 1 shake mix.
“I will develop and enhance training programs, develop and ensure consistent enforcement of rules,” Habour told Reuters. “The challenge that I have is making sure that (distributors) don't make claims above and beyond what they should make.”
Federal regulations prohibit a company from making claims about products unless they are scientifically proven.
Harbour is the second high-profile hire for the company this year.
In June, Herbalife brought on former chief aide to Vice President Biden, Alan Hoffman, as a lobbyist. While in the White House, Hoffman also served as a deputy assistant to President Obama. Hoffman most recently served as a senior vice president of global public policy for Pepsi.
Herbalife has been the target of a short-selling campaign by hedge fund Pershing Square Capital Management. The fund’s leader, billionaire Bill Ackerman, in December 2012 placed a $1 billion bet that Herbalife would fail.
Big investors have taken both long and short positions on the company’s stock, leading to a flux in its stock performance.
Herbalife’s stock prices have now dropped to their lowest levels in almost two years.