Ackman Compares Herbalife To Company Accused Of Running Pyramid Scheme

Mar 15 2013 | 12:40am ET

Pershing Square Capital Management founder William Ackman and nutritional supplements company Herbalife are back at each other's throats.

The activist hedge fund manager offered a new presentation attacking Herbalife, four months after first calling the company a pyramid scheme. Herbalife dismissed it as a demonstration of "Ackman's level of desperation."

Ackman's presentation, released on his Web site factsaboutherbalife.com, compares the direct-selling company to Fortune Hi-Tech Marketing. For Pershing Square, which has a $1 billion short bet against Herbalife, the comparison is fortuitous: Fortune Hi-Tech was charged with running a pyramid scheme by the Federal Trade Commission earlier this year.

Ackman has called on the FTC to investigate Herbalife's practices.

The slides compared the two companies' mission statements, compensation structures and income claims. Pershing Square released them in a week that has already seen a prominent consumer group call for an FTC probe into Herbalife and a class-action lawsuit filed against Ackman nemesis Carl Icahn, a major Herbalife investor, and Herbalife's banks, accusing them of complicity in Herbalife's alleged fraud.

Herbalife shot back that the presentation was merely about "generating headlines."

"It demonstrates Bill Ackman’s level of desperation with regard to his reckless $1 billion bet," Los Angeles-based Herbalife said. "The primary sourcing for this most recent report is Ackman’s own December 20 presentation, which itself is based on misrepresentations and factual inaccuracies. In the last three months, Bill Ackman has proven none of his claims about Herbalife and its business model."


In Depth

Fundraising for Mid-Sized PE Funds: Should You Use a Registered B/D?

Dec 6 2016 | 7:18pm ET

When does a fund sponsor need to use a registered broker/dealer when raising capital...

Lifestyle

Trump Attends 'Villains and Heroes' Costume Party Dressed As...Himself

Dec 5 2016 | 11:16pm ET

U.S. President-elect Donald Trump attended a "Villains and Heroes" costume party...

Guest Contributor

Nowhere to Hide: Why the Future of Asset Management Depends on Innovation

Nov 15 2016 | 6:55pm ET

Information technology has reshaped the asset management industry’s periphery,...

 

From the current issue of

Since the inception of Modern Trader, a core editorial theme has centered on the wisdom and power of crowds. Editorial emphasis has focused on companies and projects engaged in the collection and analysis of information. 

AVAILABLE NOW at BARNES & NOBLE

NEWSTAND LOCATOR