Tags: herbalife | probe | senator | ponzi | pyramid

Herbalife Falls as Senator Calls for Probe of Business Practices

Thursday, 23 Jan 2014 11:23 AM

Herbalife Ltd., the nutrition company that hedge fund manager Bill Ackman has accused of being a pyramid scheme, fell the most in a year after a U.S. senator called for a probe into the company’s operations.

The shares declined 13 percent to $63.95 at 10:37 a.m. in New York after falling as much as 15 percent for the biggest intraday decline since Dec. 21, 2012. Cayman Islands-based Herbalife more than doubled last year.

U.S. Senator Edward Markey, a Massachusetts Democrat, sent letters to the U.S. Securities and Exchange Commission and the Federal Trade Commission urging the agencies to look into Herbalife’s business practices. Markey also wrote to the company and is seeking a response to his questions by Feb. 28.

“There is nothing nutritional about possible pyramid schemes that promise financial benefit but result in economic ruin for vulnerable families,” Markey said in a statement. “Herbalife may be a purveyor of health and wellness products, but some of its distributors are suffering serious economic ill-health as a result of their involvement in the company. I have serious questions about the business practices of Herbalife and their impact on my constituents.”

Herbalife, which sells nutritional and weight-loss products through individual sellers, has repeatedly denied Ackman’s allegations that it is an illegal pyramid scheme. In December, the company said PricewaterhouseCoopers LP found no material changes in a re-audit of the company’s financial reports dating back to 2010.

Barb Henderson, an Herbalife spokeswoman, didn’t have an immediate statement on Markey’s request.

Hedge-fund manager Carl Icahn, who bought Herbalife shares after Ackman made his accusations and sold the stock short, is the company’s largest individual investor, with a 17 percent stake, according to data compiled by Bloomberg.


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Herbalife Ltd., the nutrition company that hedge fund manager Bill Ackman has accused of being a pyramid scheme, fell the most in a year after a U.S. senator called for a probe into the company's operations.
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2014-23-23
Thursday, 23 Jan 2014 11:23 AM
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