NEW YORK (TheStreet) -- Shares of Herbalife  (HLF) - Get Report surged in late morning trading Friday after the FBI and federal prosecutors began to look at Pershing Square CEO William Ackman and his contractors for possible manipulation of the nutrition and weight management company's stock.

The Wall Street Journal reported late Thursday that regulators had "conducted interviews and sent document requests in recent months in connection with the investigation, which is looking into whether people, including some hired by Mr. Ackman, made false statements about Herbalife's business model to regulators and others in order to spur investigations into the company and lower its stock price."

Ackman told CNBC on Friday that he knew the FBI had contacted Global Strategy Group, a consulting firm he hired, but emphasized that neither he nor his Pershing Square Capital hedge fund had been contacted by the FBI or the U.S. Department of Justice.

"I have no idea what questions were asked. I have no idea what answers were given," he said.

Ackman has been on a public crusade for the better part of two years against Herbalife, a multi-level marketing company that develops, markets, and sells nutrition, weight management, and skin-care products. He claims the company is a pyramid scheme that targets poor people.

Ackman has been short Herbalife for quite some time and has publicly stated his bet that the stock goes to $0.

Separately, TheStreet Ratings team rates HERBALIFE LTD as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate HERBALIFE LTD (HLF) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, weak operating cash flow and a generally disappointing performance in the stock itself."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

• Despite its growing revenue, the company underperformed as compared with the industry average of 7.5%. Since the same quarter one year prior, revenues slightly increased by 3.5%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
• The gross profit margin for HERBALIFE LTD is rather high; currently it is at 52.68%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, HLF's net profit margin of 0.89% significantly trails the industry average.
• HERBALIFE LTD has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, HERBALIFE LTD increased its bottom line by earning $4.91 versus $3.95 in the prior year. For the next year, the market is expecting a contraction of 10.8% in earnings ($4.38 versus $4.91).
• The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Personal Products industry. The net income has significantly decreased by 92.1% when compared to the same quarter one year ago, falling from $141.95 million to $11.25 million.
• Net operating cash flow has significantly decreased to $101.91 million or 54.81% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
• You can view the full analysis from the report here: HLF Ratings Report