Herbalife Under Siege By Short Sellers With Silly Pyramid Allegations

Herbalife Short Selling


Silly pyramid allegations….

Hedge fund manager Bill Ackman, founder and CEO of Pershing Square Capital Management L.P., called Herbalife (HLF) a pyramid scheme Wednesday. He also confirmed that he has been shorting the stock for most of the year and he managed to drive Herbalife stock price down with approx. 15% to below $34 these days.

Herbalife Chairman and CEO Michael O. Johnson responded to questions about Herbalife by saying:  This is blatant market manipulation. It's an attempt to illegally manipulate the market by a group of short sellers.

The allegation that Herbalife is a pyramid scheme is bogus. Make no mistake: Today's announcement isn't about Herbalife's business model. It's about Bill Ackman's business model.

Here's what we know:

  • An extraordinary number of puts on our stock are due to expire this Friday. We previously learned this activity was pegged to some kind of significant event.
  • Mr. Ackman suddenly announced today that he will make a presentation on Herbalife on Thursday, the day before the puts expire.
  • Our CFO this morning asked Mr. Ackman to allow us to participate in his presentation. Mr. Ackman declined.
  • We have been informed that Mr. Ackman has shorted our stock for the past 7 to 9 months.
  • Our stock dropped almost 15 percent today following Mr. Ackman's announcement.

We urge the SEC to investigate these series of events to protect the rights of investors. This appears to be yet another attempt to illegally manipulate the market by overzealous short-sellers.

We've been in business for 32 years. We have millions of customers worldwide. We don't pay to recruit distributors. And just today, we announced a $100 million Herbalife manufacturing facility in North Carolina that will employ 500 people.

We have one of the greatest health nutrition product lines in the world and a direct-selling business opportunity for part-time or full-time income.

We are incredibly proud of this company.

Herbalife responds in a company e-mail to Ackman's presentation as follows:

Today's presentation was a malicious attack on Herbalife's business model based largely on outdated, distorted and inaccurate information. Herbalife operates with the highest ethical and quality standards, and our management and our board are constantly reviewing our business practices and products.

Herbalife also hires independent, outside experts to ensure our operations are in full compliance with laws and regulations.



Get more information, facts and figures about Herbalife, click here for the Herbalife overview.

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Comments (1)

  1. I think this story is very exciting for the Direct Sales Industry, even if Herbalife has to go through a bumpy ride in the meantime. I heard that Herbalife stock shares have jumped since Christmas and it seems that there are more hedge-fund managers that are buying the stock, than shorting Herbalife shares. The reason why it’s exciting for this industry, is because the public is learning more about direct sales and network marketing, and that gives them a reason to do research before judging. I think that when people do enough research, they will find out that it’s not a “pyramid scheme” after all. I believe that the reason why people think many direct sales companies are pyramid schemes, is because they listen to what other people tell them without doing any proper research and so they are afraid to get involved. Before I joined my network marketing company, I also had qualms about it being a “pyramid scheme,” and I was a little unsure about whether I was getting into something illegal. But then after my research, I became more aware and educated about the network marketing industry and I realized that my opinions were based on my perceptions and what I was taught growing up. Thank goodness I did my research, because now I’m so blessed to have found this industry!

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