From Bad to Worse for GNC: Shareholders Launch Herbal Supplements Lawsuit

Pittsburgh, PAAny users of herbal supplements grousing about fraudulent content and misleading labeling now have advocates at the shareholder level, following the filing of a shareholder lawsuit against GNC Holdings Inc. (GNC). In sum, the herbal supplements lawsuit accuses the principals of GNC of standing pat while stock prices inflated, before prices tumbled once it was revealed that contents of GNC herbal supplements did not jive with the product labels.

According to reports, things became dire for shareholders of GNC when the Attorney General for the state of Oregon accused GNC of “willfully and repeatedly” vending herbal supplements that were mislabeled, and launched an herbal supplement lawsuit against the firm.

The trouble for shareholders began with the issuance of a cease-and-desist order by the attorney general’s office of New York State, the latter also accusing GNC of selling mislabeled products. That was in February of this year. Stock prices for GNC began falling after the New York announcement, with stock prices tumbling a further 43 percent since August 5.

Things became worse after the Oregon herbal supplement lawsuit was made public in October, with steep declines in share price.

As a result, GNC shareholders have launched their own herbal supplement lawsuit, joining a chorus of similar actions on the part of herbal supplement consumers incensed at the thought that what was printed on the product label was not necessarily what they were ingesting in their bodies.

“The declines in the price of GNC common stock after the corrective disclosures came to light was a direct result of the nature and extent of defendants’ fraudulent misrepresentations being revealed to investors and the market,” the shareholder lawsuit says.

Not only are shareholders upset about the alleged misrepresentation on product labels that resulted in responses by attorneys general in New York and Oregon, they are also displeased with a lack of reporting by the company as things began to turn sour, or so it is alleged. While GNC is said to have reported on its agreement to strengthen testing protocols, there was little or no mention of real or potential damages together with the potential for negative pressure on stock price as the result of the fallout stemming from mislabeled products.

The herbal supplements shareholders lawsuit reflects the interests of shareholders for the time window of November 28, 2011 through to October 28 of this year. The complaint alleges violations of the Exchange Act through deliberately misleading actions.

The herbal supplement lawsuit is James Martin et al. v. GNC Holdings Inc. et al, Case number 2:15-cv-01522, in the US District Court for the Western District of Pennsylvania.