The Federal Trade Commission settled with Herbalife on Friday, effectively determining that the nutritional supplement marketer is not a pyramid scheme.



Separately, the company said Carl Icahn and his interests have retained the right to boost their ownership stake of Herbalife to 34.99 percent, up from a previous maximum of 25 percent. Icahn currently owns 17 million common shares, or about 18 percent of Herbalife's outstanding common shares.

The FTC skirted the phrase "pyramid scheme" or "Ponzi" in its pronouncement, but by calling for changes to Herbalife's operations, rather than shutting the company down altogether, critics' main charges against Herbalife were largely quashed. However, the FTC did warn Herbalife that it will need to prove that its business model is legitimate going forward.

Investors cheered the news, sending shares up 15 percent in morning trading. (Get the latest quote here.)

Noting that he believes in the company's "strong fundamentals," Icahn said, "I have the greatest confidence in Herbalife's CEO, Michael Johnson, and the entire management team, who have skillfully led the Company through adversity, including holding firm against a high-profile PR campaign against the Company by Bill Ackman where it was alleged more than once that the Company would be shut down. Obviously, we are still here."

On Thursday, Ackman told CNBC he's still betting against Herbalife, and argued that the company needs to makes "material changes to its incentive structure."

