It’s been a painful year for Herbalife Ltd.

After an upbeat 2013, the Los Angeles nutritional products company’s stock plunged more than 50% this year amid declining profit and numerous investigations by federal and state agencies.

In March, the Federal Trade Commission said it had opened a civil investigation of Herbalife. State attorneys general in New York and Illinois also launched inquiries of the company, as did the FBI. None of the agencies has taken action, but the news battered the company’s stock.

Herbalife faced more bad news in October, announcing it would pay $15 million to resolve a class-action lawsuit that said it had victimized thousands of its distributors. The company did not admit wrongdoing, but said it would settle to avoid the expense of a protracted legal fight.

Even so, the bad news failed to shake the confidence of several of the company’s major investors.

Herbalife’s trouble can be traced to hedge fund manager Bill Ackman, whose high-profile campaign against the company is entering its third year.

In December 2012, Ackman accused Herbalife of operating a pyramid scheme and announced that he had bet more than $1 billion on Wall Street that the value of the company’s stock would fall.

The criticism initially drove Herbalife’s stock price down, but it rallied in 2013 as regulators failed to act and the company’s profit soared.

Founded in 1980 by charismatic salesman Mark Hughes, Herbalife sells protein shake powder, nutrition bars, vitamins and personal care products through a network of independent sales people in more than 90 countries.

Herbalife Chief Executive Michael O. Johnson, who took over in 2003, describes the company as a key player in the worldwide battle against obesity.

Its products are not sold at retail stores and can be purchased only by individual distributors, who profit from each sale plus commissions from sales made by those they recruited into the business.

The business model, called multilevel marketing, is used by many other companies, including Amway, Mary Kay Inc. and Nu Skin Enterprises Inc.

Johnson, a former Disney executive, said he is confident that the Federal Trade Commission would conclude that the company’s business model is sound.

The accusations and finger-pointing didn’t seem to bother investors, until Herbalife’s bottom line faltered this year.

The company has missed profit targets the last two quarters, in part because of a steep drop in value of Venezuela’s currency. It also suffered after limiting the amount of product that new sales people can purchase, a move the company said would reduce sales members’ risk as they learn the business. Some observers said the changes seemed to be an effort to impress regulators who are scrutinizing the way it operates. Johnson said the changes would benefit Herbalife in the long run.

"All companies evolve and this is what is happening at Herbalife," Johnson said. "We are making changes to the business model that will not only improve our way of doing business but also improve our results."

Herbalife’s third quarter was a major disappointment. Profit fell more than 90% to $11.2 million, a fraction of the $142 million it earned a year earlier. It also lowered its projected profit for 2015.

Herbalife shares closed Monday at $38.52, down 51% from its Dec. 31, 2013, closing price of $78.70.

Barclays analyst Meredith Adler sees reason for optimism.

"Doing the right thing can hurt," she said in a research report. "It is not exactly clear why these changes are being made so quickly, but the negative publicity around [Herbalife’s] business model probably provided a strong incentive to take action now."

Ackman continues to press regulators to act. He recently released a video that shows a top Herbalife salesman talking in 2005 about how most people who enter the business fail.

The video "underscores that Herbalife is a pyramid scheme, incentivizing distributors at all levels to focus their efforts on recruiting new distributors into the scam rather than selling Herbalife products to genuine retail customers outside the distribution network," Ackman’s company, Pershing Square Capital Management, said in a news release.

Not everything went smoothly for Ackman this year.

In July, Ackman boasted that he would unveil damaging new evidence that Herbalife’s business model is illegal. But his presentation failed to impress investors and Herbalife’s stock gained 25% in a single day.

Many Herbalife supporters remain unmoved by the recent bad news, including Carl Icahn, the company’s largest shareholder. In 2013, he snatched up 17 million shares — or more than 18% of the company — and has said he has no intention of selling.

Timothy Ramey, an analyst with Pivotal Research Group, remains upbeat about Herbalife, despite its rough year.

He said he is confident that the FTC would not shut down the company, although it probably would impose penalties. A likely target, he said, would be misleading statements that some of its sales people made about the prospects for making money selling Herbalife products.

"There will be some price to pay for compliance issues," he said. "They will say, ‘You’re not an illegal pyramid scheme, but you failed to supervise your distributors adequately so you’re going to have to pay some fine relative to that.’"

Ramey recently worked as a consultant for one of Herbalife’s top shareholders, William P. Stiritz. He left that position following criticism that it conflicted with his role as an analyst.

Of Stiritz’s position in Herbalife, Ramey said: "He’s a very long-term holder…. He, like me, is frustrated by the events of the day, but knows how this ends. It’s a relative certainty that you get from understanding the business model."

Stuart Pfeifer, Los Angeles Times