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Thread: Herbalife News Stories

  1. #76
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    Re: Herbalife News Stories

    Quote Originally Posted by Whip View Post
    How is he not in trouble for stock manipulation?
    My (limited) understanding of that issue is that if Ackman truly believes Herbalife is a fraud then lobbying for investigations, etc. isn't stock manipulation.

    There's a piece about that here:

    http://finance.fortune.cnn.com/2014/...life-ny-times/

  2. #77
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    FTC investigation could topple Herbalife

    Not much new here, but a good, quick summary of FTC rulings (that have all been discussed here):

    "Keep and others argue that the FTC’s Civil Investigative Demand last week likely demands that Herbalife come clean about its retail sales. While Herbalife’s promotional materials claim that the company "offers compensation that is directly linked to the generation of product sales," it hasn’t bothered to prove as much; it has, in fact, declined to publicly disclose information about retail sales.

    The FTC, shut in a room with Herbalife, is likely asking why."
    FTC investigation could topple Herbalife's alleged pyramid scheme | The Verge

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    Re: Herbalife News Stories

    Quote Originally Posted by JustTooMuchTime View Post
    My (limited) understanding of that issue is that if Ackman truly believes Herbalife is a fraud then lobbying for investigations, etc. isn't stock manipulation.

    There's a piece about that here:

    Questioning Bill Ackman's Herbalife profit motive - The Term Sheet: Fortune's deals blogTerm Sheet
    Don't tell clem that.

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  5. #79
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    MarketWatch: Why Ackman is right on Herbalife

    "Why Ackman is right on Herbalife
    Opinion: FTC probes activist investor’s claims of a pyramid scheme
    by Nat Worden

    As the battle between Herbalife and fund manager Bill Ackman plays out in the press, it was refreshing to see the Federal Trade Commission cut through the media sniping last week and do its job"
    " It has all the earmarks of a pyramid scheme, which is defined as an unsustainable business model that involves promising participants payment or services, primarily for enrolling other people into the sales force, rather than supplying any real investment or sale of products or services to the public. The early entrants at the top of the pyramid can make fabulous amounts of money as long as unwitting newbies at the bottom get duped into participating and roping others into making the same mistake.

    If Ackman is right about Herbalife, the company is preying on the bleak financial circumstances facing many consumers. Frequently, it’s targeting low-income, uneducated people and using the allure of a better life to fool them into investing what little money they have in a mirage that will probably never pay off. And a large array of the Herbalife marketing material that’s available leaves an impression that this is going on. "
    Full story...

    Why Ackman is right on Herbalife - Outside the Box - MarketWatch

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    National Consumers League/Others Write To Boston Globe In Support of Senator Markey

    "Senator Ed Markey lauded for championing cause of the consumer

    We write to express our support for Senator Edward Markey’s request to the Federal Trade Commission to open an inquiry into allegations from consumers that the maker of dietary supplements, Herbalife, may be a pyramid scheme. The senator is a longstanding consumer champion with whom we have worked closely for decades in our capacity as consumer advocates."
    "Knowing Ed Markey’s lifelong record of championing consumer causes, we reject the suggestion that he’s motivated by money or working to promote the interests of a hedge fund. His only priority has always been protecting consumers.

    Sally Greenberg, Executive director National Consumers League
    Gene Kimmelman, President and CEO Public Knowledge
    Joan Claybrook, President emeritus Public Citizen Washington"
    Full letter:
    Markey lauded for championing cause of the consumer - Letters - The Boston Globe

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    Ackman "Politely" tells HLF board they may have massive personal liability

    "Another development in the Bill Ackman / Herbalife Ltd. (NYSE:HLF) kerfuffle. In a politely-worded letter that is ostensibly a friendly bit of advice, Ackman warns the board of directors that they may be personally on the hook for the results of their share repurchase program if the company is indeed found to be an illegal pyramid scheme."
    Full text of Ackman's letter the board is here:
    Ackman Letter To Herbalife Ltd. (HLF) Board

    Previous letter warns Board of Directors their D&O Insurance (Directors and Officers Insurance) may be worthless:
    "As directors of a fraudulent public company, you will be held liable, at a minimum, for monetary damages, unless you have met the high standards that apply to a director's performance. You may believe that the likelihood of facing monetary liability if Herbalife were declared an illegal pyramid scheme is slight in light of the D&O coverage that Herbalife has undertaken for your benefit, exculpation clauses in the Company's organizational documents that purport to exculpate you from liability, and indemnification agreements between you and the Company.

    If, however, Herbalife were declared an illegal pyramid scheme - and we believe it should and will be - your insurance, exculpation and indemnification protections will be worthless, as will Herbalife. Your D&O coverage will likely be of no value if the Board knowingly allows fraudulent activity to continue. In this case, the Board will not be entitled to insurance coverage and the exculpatory provisions of the Company's organizational documents will not be available for violations of the duty of good faith or the duty of loyalty. Herbalife's indemnification obligations will be obligations of an insolvent company - a risk exacerbated by the Company's ongoing share repurchase program and possible upcoming leveraged recapitalization, which will diminish assets available not only to protect victims of the Company's misconduct, but also to provide indemnification protection to the Board.

    Unlike virtually all reputable U.S. public companies, which are incorporated in Delaware or other domestic jurisdictions, Herbalife is organized as an offshore, Cayman Islands company. Nevertheless, it is likely that the Cayman Islands courts will look to Delaware law, as it is the most highly developed body of corporate law. It is well settled under Delaware law that a board of directors is grossly negligent if it does not establish and monitor the company's information and reporting systems to assure that the business is being conducted properly and legally. For example, in the Caremark case, the court stated "a director's obligation includes a duty to attempt in good faith to assure that a corporate information and reporting system, which the board concludes is adequate, exists, and that failure to do so under some circumstances may, in theory at least, render a director liable for losses caused by non-compliance with applicable legal standards." In re Caremark Int 7, Inc. Derivative Litig., 698 A.2d 959 (Del. Ch. 1996); see also Stone ex rel. AmSouth Bancorp v. Ritter, 911 A.2d 362 (Del. 2006)."
    The full letter is here:


    http://ify.valuewalk.com/wp-content/...-Directors.pdf

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    Herbalife Ltd. Could Be Hurt By Ruling In Case Against Burnlounge

    Nothing really new here, but worth repeating:

    "FTC filed a complaint against Burnlounge in 2009, alleging that it is a pyramid scheme. Burnlounge is an online music company which sells music through what it calls “burnpages.” The company gets most of its money by charging for premium services. These services allow members to earn cash for recruiting new members to the service. Five years after the case was filed, an appeals court ruled against Burnlounge and levied a $17 million judgment against the company.

    However, the case is up on appeal again, this time because of a one in the final judgment. The court defined exactly what it meant by the term “pyramid scheme.” The line highlighted by McCrum is: “For purposes of this definition, ‘sale of products or services to ultimate users’ does not include sales to other participants or recruits or to the participants’ own accounts.”
    Full story:
    Herbalife Ltd. Could Be Hurt By Ruling In Case Against Burnlounge

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    Icahn may add reps to Herbalife board but won’t add to stake

    "While Herbalife said in a regulatory filing that talks between it and Icahn over an added board seat were ongoing, it was not known that the Los Angeles company had approached Icahn about the issue soon after it learned of the Federal Trade Commission probe.

    While Icahn, who has a 17 percent stake in the distributor of weight-loss shakes, has not made up his mind yet on whether he will name an added board member, he has determined he will not buy more Herbalife shares as part of that deal, sources said."
    Full story:

    Icahn may add reps to Herbalife board but won’t add to stake | New York Post

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    Re: Ackman "Politely" tells HLF board they may have massive personal liability

    Quote Originally Posted by JustTooMuchTime View Post
    Full text of Ackman's letter the board is here:
    Ackman Letter To Herbalife Ltd. (HLF) Board

    Previous letter warns Board of Directors their D&O Insurance (Directors and Officers Insurance) may be worthless:


    The full letter is here:


    http://ify.valuewalk.com/wp-content/...-Directors.pdf
    According to this article:

    "One source close to the board said Ackman’s letters were discussed in board meetings last year but were dismissed as “scare” tactics."

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    Herbalife, MLMs And The Unhappy Folks Of Whoville

    Love this article!

    "According to some stories , Bill Ackman, a green man with a heart two sizes too small, unfairly manipulated the political process to his advantage. Such stories argue that: a) this represents a stunning departure from the past behaviors of other green men and women (mostly men), and b) Herbalife and potentially other MLMs will now be subjected to unfair scrutiny. Of course, both arguments are hogwash."
    "we hear pious outrage from some of these same investors and media. During this past year, I spoke with dozens of investors. Some small percentage actually wanted to know how we got to this point: How could the legitimacy of a 33-year old company be questioned? And by extension: What do we know or not know about the MLM industry? Most couldn't care less; they simply wanted to time their entry and exit from the market. To be fair, that is what they get paid to do. I get that. But then be what you are, and don't pretend to take on the false mantle of moral outrage."
    Worth reading the whole thing!

    Read more: Herbalife, MLMs And The Unhappy Folks Of Whoville - NASDAQ.com

  14. #86
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    Robert Weinstein of The Street thinks Herbalife distributors are just like insurance salespersons

    "My bias against Herbalife, Nu Skin Enterprises , Avon and especially Amway stems from the countless number of times I've been approached with an "investment opportunity."

    That said, joining one of the above or the many others isn't substantially different from becoming a real estate or insurance salesperson. Real estate and insurance people are normally considered independent contractors who start out losing money and have a small chance of becoming successful. "
    ...Says Robert Weinstein writing for The Street. Insurance salespersons make their money by buying insurance from themselves.

    Or, to reiterate what the SaltyDroid said:

    "If you buy pants from the store :: then you’ll have pants … but no money. If you buy pants from yourself :: then you’ll have pants … and money! It’s a win win :: for you … and yourself. Whoever thought up this whole “just buy **** from yourself” thing … should give themselves the Nobel Prize in imaginary economics."
    Of course we don't know if that's definitively true or not yet...because Herbalife won't give us the numbers to LET us know!

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    Ackman’s Pershing Near Break Even on Losing Herbalife Bet

    "Herbalife fell to a eight-month low of $49.54 today, approaching the level when Ackman first put on his trade. The hedge-fund manager started what would become a $1 billion bet against the stock in May 2012, he has said, before disclosing it on Dec. 19 of that year. During that period the stock was trading at an average price of $48.58. Ackman has since restructured his Herbalife wager using long-term put options, making an exact determination of his break-even point difficult. "
    Ackman

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    Herbalife: No Recovery Until Investigation Ends

    "Argus analyst John Staszak explains why he cut Herbalife to Hold from Buy:

    [Herbalife] shares are trading at 8.6-times our revised 2014 EPS estimate, toward the low end of the historical average range of 6-23 and below the peer group average of 15. The company posted strong results in 2013, and we believe that its core business remains solid…

    However, [Herbalife] shares have fallen sharply over the last week, and we believe that they are unlikely to recover until the [FTC] investigation is completed. We also note that only 20% of the company’s business is in the U.S and that additional scrutiny of its operations by other nations could hurt the shares. If the FTC investigation turns out favorably for Herbalife, we would consider returning the stock to our BUY list."
    Only 20% of HLF business is in the U.S. Didn't know that. Crazy, but makes perfect sense.

    Herbalife: No Recovery Until Investigation Ends - Stocks To Watch - Barrons.com

  17. #89
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    Re: Herbalife News Stories

    I didn't either but it's very telling.

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    Re: Herbalife News Stories

    Quote Originally Posted by Whip View Post
    I didn't either but it's very telling.
    Yep. That's what I was thinking, too.

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    Will Carl Icahn push out current Herbalife management?

    From Businessweek:

    "'Inviting Icahn into your board room to keep Ackman out is like inviting Hell’s Angels into house to guard you against angry librarians,” he said.

    Icahn may eventually want to push out Herbalife’s management to help boost the company’s value, Gordon said.

    “With five directors, he needs to convince only two of the remaining eight to join him in changing management or anything else,” Gordon said. “He got closer without having to buy additional shares or engage in an expensive proxy battle.'"
    Herbalife Strengthens Ties With Icahn as Ackman War Rages - Businessweek

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    Herbalife launches website to counter pyramid scheme claims

    "Herbalife's site, iamherbalife.com, describes Ackman's claims as misleading and features a link to dozens of testimonials from users touting the company's products and how healthy they are after taking them.

    It adds that there is no guarantee of success as a distributor, contrasting with some of its promotional videos showing distributors riding snowmobiles and horses, talking about their lavish lifestyles and how others can copy them.

    Herbalife writes on the site that it is a "legitimate multi-level marketing company" focused on selling its shakes and powders to people who want to consume them. It also makes clear that Ackman will make money if Herbalife's share price falls and could lose money if it climbs."
    Full Story:
    Herbalife launches website to counter pyramid scheme claims | Reuters

  22. #93
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    Re: Herbalife News Stories

    Herbalife writes on the site that it is a "legitimate multi-level marketing company" focused on selling its shakes and powders to people who want to consume them.
    If that were true, they wouldn't need to be MLM

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  24. #94
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    Herbalife's Changing Message Confuses Carl Icahn And Distributors Alike

    "Herbalife Ltd. (NYSE:HLF) changing their messaging? Both the distributors and Carl Icahn seem confused. We look at the evolving Herbalife message and specifically look at comments which Carl Icahn has made."
    Must read:

    Herbalife Ltd. (HLF): A Changing Message To Distributors?

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    Herbalife Appoints former Senator Reid Senior Advisor

    "Herbalife Appoints former Senator Reid Senior Advisor as Vice President, Community Engagement and Health Policy

    Mon March 24, 2014 4:40 PM|Business Wire | About: HLF


    LOS ANGELES--(BUSINESS WIRE)-- Global nutrition company Herbalife (HLF) announced today that Angela Arboleda, joins the company in the newly created role of vice president, community engagement and health policy. Arboleda will work out of Herbalifes Washington, D.C. office and will report to Amy Greene, vice president, government corporate and investor relations.

    Arboleda will be responsible for external relations activities including managing Herbalifes third-party relationships in minority communities including Hispanic, African American and Asian American. In addition, Arboleda will serve as the lead lobbyist for Democratic outreach and work on a variety of policy issues for the company.

    Arboleda joins Herbalife after a 17-year career in public service most recently as senior policy advisor for Latino and Asian-American Affairs for the Office of Senate Majority Leader Harry Reid (D-NV), where she served as the liaison to the Congressional Hispanic Caucus and the Congressional Asian Pacific American Caucus working directly with the Members of Congress. She also developed policy and messaging that conveyed the positions of the Democratic Caucus, advised the Democratic Steering and Outreach Committee Hispanic Task Force and managed external relations with a broad number of advocacy groups and coalitions.

    Prior to her time on Capitol Hill she served as Director of the Civil Rights and Criminal Justice Policy at the National Council of La Raza (NCLR) the largest national Hispanic civil rights and advocacy organization in the U.S. She served as the organizations spokesperson on civil rights and policy issues. She was responsible for civil rights and criminal justice policy analysis, advocacy activities, and research that have an impact on Latinos in the United States. Arboledas publications include Lost Opportunities: the Reality of Latinos in the U.S. Criminal Justice System, the first book to ever focus on Latinos in the justice system.

    Earlier in her career, Arboleda worked at the National Organization for Women (NOW) and the Feminist Majority Foundation where she was lead organizer for political and corporate campaigns, ballot initiatives and political rallies.

    Arboleda is a graduate of the Elliot School of International Affairs at George Washington University.

    About Herbalife Ltd.

    Herbalife Ltd. is a global nutrition company that sells weight-management, nutrition and personal care products intended to support a healthy lifestyle. Herbalife products are sold in more than 80 countries to and through a network of independent distributors. The company supports the Herbalife Family Foundation and its Casa Herbalife program to help bring good nutrition to children. Herbalife's website contains information about Herbalife, including financial and other information at Herbalife - United States - Official Site.

    http://cts.businesswire.com/ct/CT?id...cqr7&distro=nx

    Herbalife Ltd.
    Media Contact:
    Julian Cacchioli
    213-745-0519
    or
    Investor Contact
    Amy Greene
    213-745-0474

    Source: Herbalife Ltd.
    Copyright Business Wire 2014"

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    Re: Herbalife News Stories

    looking for a lil influence with the investigation?

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    4 Million Reasons Herbalife Is A Money Transfer Scheme

    "The FTC is now investigating Herbalife and, put simply, these are the kinds of questions investigators will be asking.

    Do participants make money?
    How many quit?
    Is the company like an iceberg?
    Are sales made to non-participants?
    Does the pay plan encourage inventory loading?
    Is compensation tied to retail sales to ultimate users?
    Does the pay plan emphasize recruiting over retail sales?
    Are the results experienced by participants rigged/preordained?
    Is there evidence the company is a money transfer scheme?

    When you contrast the earnings of company shareholders like Carl Icahn and Bill Stiritz or the company's management team with the earnings and churn rates of the company's most junior participants, what do you see? Isn't it obvious that shareholder spoils are financed by the economic losses of those who are recruited with false promises and false hope?"
    Full story:
    Herbalife Ltd. (HLF) news: 4 Million Reasons Herbalife Is A Money Transfer Scheme - Seeking Alpha

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    Herbalife under FBI investigation

    "The FBI has launched a criminal investigation of Herbalife and its web of independent distributors, a federal law enforcement source told The Times.

    A federal law enforcement official in New York confirmed Friday that the FBI had opened an inquiry into Herbalife but did not know first-hand the extent of the investigation. “I can’t give any guidance on where it’s headed,” the official said.

    The official asked not to be identified because he was not authorized to speak about publicly about the investigation, which was first reported by the Financial Times."
    Herbalife under FBI investigation; shares tumble - latimes.com
    "

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    NY attorney general probes Herbalife

    "New York Attorney General Eric Schneiderman is investigating Herbalife over claims it is a pyramid scheme, The Post has learned.

    At least two whistleblowers have come forward and given Schneiderman’s investigators sworn testimony, sources said.

    The New York lawman has also fielded complaints from former Hispanic Herbalife distributors who say they were defrauded by Herbalife, sources said.

    A spokesman for Schneiderman declined comment."
    NY attorney general probes Herbalife: sources | New York Post

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    Pomerantz Law Firm Announces the Filing of a Class Action Against Herbalife Ltd. and Certain Officers

    "NEW YORK, April 14, 2014 (GLOBE NEWSWIRE) -- Pomerantz LLP announces the filing of a class action lawsuit against Herbalife Ltd. ("Herbalife" or the "Company") (NYSE:HLF) and certain of its officers. The class action, filed in United States District Court, Central District of California and docketed under 2:14-cv-02850, is on behalf of a class consisting of all persons or entities who purchased or otherwise acquired securities of Herbalife between May 4, 2010 and April 11, 2014 both dates inclusive (the "Class Period"). This class action seeks to recover damages against the Company and certain of its officers and directors as a result of alleged violations of the federal securities laws pursuant to Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder.

    If you are a shareholder who purchased Herbalife securities during the Class Period, you have until June 13, 2014, to ask the Court to appoint you as Lead Plaintiff for the class. A copy of the Complaint can be obtained at Pomerantz Law. To discuss this action, contact Robert S. Willoughby at rswilloughby@pomlaw.com or 888.476.6529 (or 888.4-POMLAW), toll free, x237. Those who inquire by e-mail are encouraged to include their mailing address, telephone number, and number of shares purchased.

    Herbalife is a network marketing company that sells weight management, nutritional supplement and personal care products. The Company sells its products globally through a network of independent distributors, which are typically individuals with little marketing expertise that were induced by the Company to purchase the Company's products in the hope that they would be able to resell the product to other consumers or distributors. Herbalife also sells literature and promotional materials to these distributors.

    The Complaint alleges that throughout the Class Period, Defendants made materially false and misleading statements regarding the Company's business, operational and compliance policies. Specifically, Defendants made false and/or misleading statements and/or failed to disclose that: (i) the Company's operations were based on a pyramid scheme whereby its distributors generate revenue by recruiting other distributors rather than selling Herbalife's diet and nutritional products to the general public; (ii) the Company engaged in deceptive trade practices where it unduly pressured its members to purchase more products to resell as one of its "distributors"; and (iii) as a result of the above, the Company's financial statements were materially false and misleading at all relevant times.

    On December 19, 2012, CNBC reported that Bill Ackman ("Ackman"), Founder and Chief Executive Officer of Pershing Square Capital Management, L.P. ("Pershing") considers Herbalife to be a pyramid scheme after spending a year researching the Company's fundamentals. On this news, Herbalife stock declined $5.16 per share, or over 12%, to close at $37.34 per share on December 19, 2012.

    On December 20, 2012, Ackman conducted a presentation concerning Herbalife at the Sohn Investment Conference where he affirmed his conclusion that Herbalife is a pyramid scheme as its distributors make more money by recruiting other distributors than selling the Company's products to the general public. Specifically, Ackman alleged that since the founding of the Company, approximately 1.9 million distributors have failed to make any money from selling Herbalife products, costing them a net loss of $3.8 billion. On this news, Herbalife stock declined an additional $10.07 per share, or over 27%, over the next two trading sessions, to close at $27.27 per share on December 21, 2012.

    On January 9, 2013, the New York Times reported that the Securities and Exchange Commission had opened an investigation into the Company.

    On January 23, 2014, U.S. Senator Edward J. Markey of Massachusetts sent letters to federal regulators, including the SEC and the FTC, urging them to investigate Herbalife. Mr. Markey also sent a letter to Herbalife's CEO, Michael O. Johnson, asking several questions about the company's business, including pointed requests that reflected the concerns raised by Ackman in December 2012. Some of the questions asked in the letter to Herbalife include: (1) "How much profit (net earnings after expenses) can the average distributor expect to make from retailing to non-distributors (i.e., people who are not directly involved in Herbalife themselves)?"; and (2) "What's the correct number of sales outside the network as a percentage of total sales" for each of the last five years and information on these sales measured by product, quantity and dollars.

    Senator Markey urged both the FTC and SEC to examine whether Herbalife was a legitimate multilevel marketing Company, whose revenues are ultimately generated by sales to the general public; or whether Herbalife was a pyramid scheme, whose revenues were dependent on continuous recruitment of other distributors, which were ultimately left sustaining substantial losses on their purchases of the Company's weight loss products. To highlight evidence that Herbalife may indeed operate as a pyramid scheme, Senator Markey pointed to instances where residents of Massachusetts suffered crushing financial setbacks as a result of the Company's marketing practices. On this news, Herbalife stock declined $7.61 per share, or over 10%, to close at $65.92 per share on January 23, 2014.

    On April 11, 2014, the Financial Times reported that the United States Department of Justice and Federal Bureau of Investigation had opened a criminal probe of Herbalife. On this news, shares of Herbalife spiraled downward from $59.84 to $51.48, more than 13%.

    The Pomerantz Firm, with offices in New York, Chicago, Florida, and San Diego, is acknowledged as one of the premier firms in the areas of corporate, securities, and antitrust class litigation. Founded by the late Abraham L. Pomerantz, known as the dean of the class action bar, the Pomerantz Firm pioneered the field of securities class actions. Today, more than 70 years later, the Pomerantz Firm continues in the tradition he established, fighting for the rights of the victims of securities fraud, breaches of fiduciary duty, and corporate misconduct. The Firm has recovered numerous multimillion-dollar damages awards on behalf of class members.

    CONTACT: Robert S. WilloughbyPomerantz LLPrswilloughby@pomlaw.com

    Source: Pomerantz LLP"
    Read more: Pomerantz Law Firm Announces the Filing of a Class Action Against Herbalife Ltd. and Certain Officers -- HLF - NASDAQ.com

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