The saga surrounding Herbalife Ltd. continues.
Pershing Square’s Bill Ackman, the hedge-fund manager who has bet big against shares of the nutritional supplement maker, released a statement Tuesday night applauding a consumer group’s plea for the Federal Trade Commission to investigate Herbalife as a potential pyramid scheme.
Earlier Tuesday, the National Consumers League released a letter urging the FTC to take action because the allegations against Herbalife could impact consumers. The group said it had met separately with representatives from Herbalife, Pershing Square and the Direct Selling Association, and concluded that an investigation is the best answer to determine whether Herbalife is a legitimate business or whether it operates a pyramid scheme.
More In Herbalife- Herbalife Embraces Icahn: Will Nominate Two Reps to Board
- Herbalife: Didn't Block Ackman Firm From Asking Questions
- Ackman, Icahn Silent Amid Herbalife's Earnings Call
- MarketBeat Podcast: Animal Spirits, or Something Like That
- Wall Street's Hubris Meter Ticking Higher
“We are pleased that the National Consumers League, the nation’s oldest and one of the most respected consumer protection organizations, has requested that the FTC launch an investigation of Herbalife,” Ackman released in a statement. “We believe that a thorough investigation of Herbalife will reveal it to be a pyramid scheme that has harmed millions of consumers in more than 80 countries around the world.�
Ackman has said�U.S. regulators risk embarrassment if they fail to take action against Herbalife.�”If the FTC misses Herbalife, it’s the equivalent of the SEC missing Madoff,” he said at a conference last month.
Herbalife has repeatedly called Ackman’s allegations malicious and has accused him of trying to manipulate its stock, a charge he has denied.
�Allegations that Herbalife�s business model is a pyramid scheme are serious charges with serious consequences for consumers and those who are recruited to sell Herbalife�s products,” said Sally Greenberg, executive director at the National Consumers League. “The FTC is the federal agency with the right mandate and expertise to explore these allegations.�
Herbalife shares finished Tuesday down 2.1% at $40.38.
Other prominent investors have entered the fray in recent months, adding mystique to the showdown that has already captivated Wall Street. Carl Icahn has been building a sizable stake in the company. Last month Herbalife�said it had reached an agreement with the billionaire investor to increase the size of its board and nominate two Icahn representatives.
For more MarketBeat and other streaming markets coverage from The Wall Street Journal, point your mobile browser to wsj.com/marketspulse.
No comments:
Post a Comment