Ackman: Herbalife “A Pyramid Scheme”

Ackman called the company “a pyramid scheme,” according to a report at The Wall Street Journal. Later today he is expected to tell a conference audience his reasons for shorting Herbalife stock.

In May of this year, David Einhorn of hedge fund Greenlight Capital, sought answers to questions about the way distributors account for the products that Herbalife ships to them. Herbalife countered with a $428 million share buyback, but that didn’t stop the stock’s collapse. The Securities and Exchange Commission asked Herbalife for answers to the same questions in August.

Shares of Herbalife closed down 12.1% today at $37.34 after posting a new 52-week low of $35.95 earlier today. Shares are down another 0.9% in after-hours trading, at $37.01.

Paul Ausick