Herbalife (HLF) shares fell 2% Wednesday, erasing much of their gains this week. The rally had been prompted by a Tuesday report that the nutrition-products distributor had arrived at a preliminary settlement with the Federal Trade Commission.
Shares dropped sharply after CNBC reported via Twitter, citing an anoymous source, that the decision with the FTC is not imminent and that "several issues" are "still on the table."
Source: No $HLF decision expected this week. Discussions said to be ongoing. Several issues still on the table.¿ Scott Wapner (@ScottWapnerCNBC) May 25, 2016
Herbalife shares are up more than 13% so far this year, largely buoyed by a strong first-quarter earnings beat. But many investors appear to be cautiously waiting for the result of a years-long FTC investigation to conclude, which was sparked by allegations by activist shareholder Bill Ackman that Herbalife's distribution business resembles a so-called "pyramid scheme."
"The discussions with the FTC are in the advanced stages, but there are still a number of material open issues that could preclude reaching final agreement," Herbalife said in a statement this month. "If discussions with the FTC do not continue to progress, it is likely that litigation would ensue."
Ackman first announced his attack on Herbalife in December 2012, simultaneously with the unveiling of a $1 billion short position against Herbalife that his hedge fund Pershing Square held.