Tags: Icahn | Herbalife | Short-Seller | lawsuit

Icahn Asks Court to Dismiss Lawsuit by Herbalife Short-Seller

Tuesday, 20 Aug 2013 10:38 AM

Carl Icahn has asked a federal judge to dismiss a lawsuit brought by a short seller who accused the activist investor of perpetuating an alleged pyramid scheme at nutritional products company Herbalife Ltd.

In papers filed with the U.S. District Court in Manhattan, Icahn said the lawsuit by Daniel Ravicher was based on an "inaccurate and absurd" allegation that the billionaire had "publicly conceded" that Herbalife is a fraud.

Icahn said Ravicher's claim was premised merely on statements by Icahn that he had conducted "considerable research on Herbalife and its business" and believed in its "proven ability to increase revenues."

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Ravicher, a lawyer based in Florida, has alleged he lost more than $75,000 on his short position.

He said he took that position around the time that hedge fund investor William Ackman last December said he was shorting Herbalife stock, also calling the company a pyramid scheme.

A short sale is a bet that a stock price will fall.

Ravicher's investments stand to expire worthless in November if Herbalife's stock price is $45 or higher, court papers show.

The shares have risen 89 percent this year despite closing down 4.1 percent at $62.27 on Monday.

In a phone interview, Ravicher called Icahn's filing "predictable."

"We will respond in due course. It is quite noticeable that he failed to respond to my allegation that his entire Herbalife investment was motivated by a vendetta against Bill Ackman," Ravicher said.

Icahn, through a spokeswoman, was not immediately available for comment.

Monday's filing came 10 days after Bank of America Corp., JPMorgan Chase & Co. and Wells Fargo & Co. and 50 current and former officers and directors sought to dismiss two lawsuits in which Ravicher accused them of aiding a fraud at Herbalife by providing $1.2 billion of financing.

Ackman's firm, Pershing Square Capital Management, has a $1 billion short bet on Herbalife, and has lost more than $300 million so far, Reuters has reported.

Herbalife has offices in Los Angeles but is incorporated in the Cayman Islands.

Editor’s Note: 75% of Seniors Make This $152,000 Social Security Mistake (See Easy Fix)

© 2017 Thomson/Reuters. All rights reserved.

   
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Carl Icahn asked a federal judge to dismiss a lawsuit brought by a short seller who accused the activist investor of perpetuating an alleged pyramid scheme at nutritional products company Herbalife Ltd.
Icahn,Herbalife,Short-Seller,lawsuit
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2013-38-20
Tuesday, 20 Aug 2013 10:38 AM
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