Herbalife (HLF) 'Pyramid-Scheme' Debate Discussed in NYT Op-Ed

The Herbalife (NYSE: HLF) 'pyramid-scheme' debate was discussed in a New York Times op-ed today, which follows the FTC's recent move against Vemma. The author notes there is no law defining a pyramid scheme, nor are there even any regulations on the books, which has created the controversy.

From the op-ed:

Indeed, the F.T.C.’s move against Vemma has caused both sides in the Herbalife battle to claim vindication. Although the F.T.C. has been investigating Herbalife for some 17 months, Timothy S. Ramey, a stock analyst and Herbalife bull, raised his price target for the company, saying Vemma’s business model was clearly different from Herbalife’s. Meanwhile, Ackman prepared a 29-slide deck with side-by-side comparisons of all the ways, in his view at least, Herbalife’s business model was exactly like Vemma’s.

also

"Ackman says Herbalife is a pyramid scheme because the only way people can make any money is by recruiting others, not by selling the company’s protein shakes. Herbalife says its business model is on the up and up because it is selling a real product to consumers who sign up more to get product discounts than to become part of a recruiting network. Parloff, after months of investigation, came down more on Herbalife’s side than Ackman’s, though in truth, that’s just his best guess. The F.T.C. wouldn’t talk to him, either."

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