Officials from the Department of Justice and several additional agencies announced Tuesday an indictment for deceptive advertising claims made by the makers of nutritional supplements, sending stocks prices falling throughout the nutritional supplement industry.
“Consumers turn to supplements when they want to lose weight, get an edge in athletic performance, or improve their overall well-being,” Deputy Assistant Attorney General Benjamin C. Mizer said Tuesday in prepared remarks. “From California to Maine, consumers ingest pills, powders and liquids every day, not knowing whether they are wasting money or whether they may end up harming, rather than helping, themselves.” In addition to the DOJ, officials from the Federal Trade Commission, the Food and Drug Administration , the U.S. Postal Inspection Service and the Department of Defense took part in the sweep.
The probe led to indictments against a group of dietary supplement makers including USPlabs, maker of Jack3d and OxyElite Pro, which Mizer accused of lying about the provenance of its products and conducting insufficient safety testing.
“This deception put lives at risk,” he said. Mizer added that officials were “not here to criticize the entire supplement marketplace. Not every supplement contains an undisclosed ingredient. Not every label lies about what is contained in the bottle.” Those comments didn’t stop investors from abandoning supplement stocks in droves though.
Though dietary supplement companies and retailers like Herbalife, GNC, and Vitamin Shoppe were not named in the indictments stocks for those companies plunged on news of the announcement. GNC stock fell 22%, recovering somewhat thereafter, while Vitamin Shoppe fell 6.5% and Herbalife was down about 1% in afternoon trading. Investor George Soros sold off his firm’s entire holding of Herbalife stock Tuesday, reports CNBC.