Ackman's Firm Applauds Group's Call for Herbalife Probe

Activist investor Bill Ackman's Pershing Square Capital says it is pleased by a consumer advocacy group's request for an investigation into the business practices of Herbalife (NYSE: HLF  ) .

The group, the National Consumers League, on Tuesday said it had asked the Federal Trade Commission to launch a probe into allegations -- made by Ackman and others -- that Herbalife operates what is tantamount to a pyramid scheme. The National Consumers League describes itself on its website as a private, nonprofit advocacy group representing consumers on marketplace and workplace issues.

It said in its letter to the FTC that it had recently met separately with representatives of Pershing Square, the Direct Selling Association, and Herbalife. "We believe that only the Federal Trade Commission has the resources and expertise to investigate," the group wrote.

In its statement, Pershing Square said: "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. 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."


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  • Report this Comment On March 13, 2013, at 2:32 PM, SyDVooh wrote:

    Apparently, a stock operator such as Ackman, has shamed one consumer protection group into doing their job of protecting consumers from, one of the many, MLM pyramid scheme frauds.

  • Report this Comment On March 13, 2013, at 4:28 PM, dhuddle wrote:

    I can see Ackman has renewed his attacks - a N.Y. lawyer who filed a suit and now this. Ask Ackman if he made a donation to this National Consumers League, or what the connection is - I think this was set up for media effect.

    What is the basis of their complaint? In the press release it says they are impressed with a short seller's claims - they don't mention the billions of dollars that, in my opinion, Pershing has caused honest investors to lose by making fraudulent claims motivated solely by their desire to make quick profits. How about it National Consumers League - call for an investigation by the SEC of market manipulation by Ackman and Pershing.

    Below are 3 ways anyone with common sense can know that HLF is not a pyramid scheme --

    1.HLF has an A+ BBB rating with zero complaints (Google it yourself) - by comparison, American Express had 2,300 complaints in 3 years. The last Pyramid Scheme shut down (FHTM) had an "F" rating and 78 complaints. Do you really think a Pyramid Scheme could have an A+ rating?

    2. The largest consumer products company ever shut down as a Pyramid Scheme (FHTM) only reached $400 Million in revenues - HLF is at $4 Billion. True pyramid schemes are like a house of cards and collapse under their own weight.

    3. HLF only charges distributors $59, less than I pay Costco and Sams to be a business "Member" so I can get their discounts. Let's say HLF signs up 2 million "Distributors" a year (70% of them are actually consumers signing up so they get the discount), by my calculation that is $118 MM of revenue out of $4 Billion - HLF would have to be collecting over $2 Billion in Fees to be a Pyramid scheme.

  • Report this Comment On March 13, 2013, at 8:26 PM, SyDVooh wrote:

    @dhuddle: You're a shill for Herbalife. You posted nothing to prove that HLF isn't a scam. Sure, Ackman is doing this for money. The fact is, what he said about Herbalife is true. Consumer protection groups don't generally go after MLM pyramid scheme frauds such as Herbalife, because they can't afford the costs of legal litigation. The FTC has been under pressure for decades, from crooked politicians, to lay off investigating these scams. Maybe now that the light of public opinion has been focused on one of these MLM pyramid scams, Herbalife, the government will have to finally do its job of protecting consumers and investors from these frauds.

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