In its letter to the FTC, the NCL notes:
Pershing Square’s research suggests that Herbalife‘s business practices may run afoul of many of the “red flags” of pyramid scheme activity in NCL’s guide.
For its part, Herbalife responded to the NCL’s letter in a statement to The Wall Street Journal:
We regret that the National Consumers League has permitted itself to be the mechanism by which Pershing Square continues its attack on Herbalife. If anything, it is Pershing Square that should be investigated by appropriate authorities. Its actions are motivated by a reckless $1 billion bet against the company based on knowingly false statements about Herbalife.
So far Carl Icahn has not weighed in, but don’t be surprised if the activist investor raises his stake in Herbalife again.
Ackman, as might have been expected, praised the NCL:
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.
We’ve said before that Ackman’s goal here has got to be to force the FTC to launch an investigation into Herbalife. If that happens, his short bet against the company will pay off. The outcome of such an investigation would hardly matter.
Shares of Herbalife are down about 2% at $39.60 in a 52-week range of $24.24 to $73.00.
The NCL letter is available here.
Essential Tips for Investing (Sponsored)
A financial advisor can help you understand the advantages and disadvantages of investment properties. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
Investing in real estate can diversify your portfolio. But expanding your horizons may add additional costs. If you’re an investor looking to minimize expenses, consider checking out online brokerages. They often offer low investment fees, helping you maximize your profit.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.