Ackman Breathes Easier as Major Consumer Group Calls for FTC Investigation of Herbalife (HLF)
The National Consumers League (NCL) today urged the Federal Trade Commission (FTC) to investigate recent allegations from Pershing Square that the multi-level marketing company Herbalife is, in actuality, a sophisticated pyramid scheme. The NCL wants the federal agency to evaluate the evidence on both sides and make a determination that will serve as an important guide to consumers.
"Having reviewed this report, Herbalife's responses to it, and associated analyst and media coverage, we believe that the FTC should conduct a thorough investigation," said Sally Greenberg, NCL Executive Director. "Allegations that Herbalife's business model is a pyramid scheme are serious charges with serious consequences for consumers and those who are recruited to sell Herbalife’s products. The FTC is the federal agency with the right mandate and expertise to explore these allegations."
A copy of the NLC's letter to the FTC can be found here.
“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," Ackman's Pershing Square Capital Management, L.P. said in a statement about the matter Tuesday evening. "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."
In an SEC filing earlier Tuesday, Carl Icahn disclosed he raised his stake by 322,716 shares to 16,355,131 shares, or approximately 15.9 percent of company. He has an agreement in place to acquire up to 25 percent.
Bill Ackman is short over 20 million shares through his Pershing Square hedge fund.