Monday, 26 September 2016
Last updated 3 min ago
Jan 24 2014 | 12:03pm ET
William Ackman's stalking the halls on Capitol Hill has finally paid off in his battle with nutritional supplements company Herbalife.
The Pershing Square Capital Management chief spoke with a number of lawmakers last year about Herbalife, which he has called a pyramid scheme. One, apparently, listened: Sen. Ed Markey (D-Mass.).
Markey, who entered the Senate last year following the resignation of John Kerry, yesterday asked the Securities and Exchange Commission and Federal Trade Commission to open probes into Herbalife. Ackman has bet $1 billion that the FTC will shut the company down—a bet that cost him about a half-billion dollars last year, as Herbalife's shares soared.
News of Markey's intervention sent Herbalife shares plunging 10%.
Ackman and Markey have not met in person, Markey's spokeswoman said. But Ackman did meet with the senator's staff last fall, and Pershing Square lobbyists have since held further meetings with them.
In his letters, Markey said he had heard complaints about Herbalife from constituents, including one family who claimed to have lost $130,000 as distributors for the country.
"I have seen reports from Massachusetts residents that suggest Herbalife is a pyramid scheme," Markey wrote.
The senator also expressed his concerns to Herbalife itself. The company noted that Markey's letter echoed many of the allegations leveled by Ackman, but said it looked "forward to an opportunity to introduce the company to him and address his concerns at his earliest convenience."
Markey is the first elected official to call for a probe into Herbalife. The FTC has also been lobbied by the National Consumers League, while California and Illinois officials have been urged to begin investigations by other groups.
For his part, Ackman denied trying to influence Markey with money, with a spokesman saying "Mr. Ackman has never given a political donation to Sen. Markey." Ackman did give $32,400 to the Democratic Senatorial Campaign Committee on the day Markey won the primary to seek the Senate seat in a special election.