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Herbalife foe releases video of former sellers claiming they were duped
[BOSTON] Hedge fund manager William Ackman, who has a US$1 billion short bet on Herbalife stock, on Tuesday released a video of former Herbalife sellers claiming the company misled them.
The video, in which people said they lost large sums selling Herbalife's nutrition and weight loss products and were not fairly informed about the risks, was the latest unsuccessful effort by Mr Ackman to make Herbalife's stock fall.
He has waged a three-year battle to shut the multi-level marketing company down since accusing it in 2012 of being a fraud, something the company has steadfastly denied.
Herbalife shares on Tuesday opened flat then rose 2.6 per cent to US$44.55. The stock is up about 24 per cent over the past 12 months. The company had no comment on the video.
A handful of people said in the video, made by Mr Ackman's firm, they did not see Herbalife disclosures that show most people earn nothing from the company for selling its products. "If I had seen this paper before signing up, I would not have done it," a woman named Ana C. said in the video. She said she lost US$110,000 while working with Herbalife between 2010 and 2013.
Mr Ackman's firm, Pershing Square Capital Management, posted the video on its website www.factsaboutherbalife.com to illustrate what he has called Herbalife's predatory recruiting practices.
Herbalife is a multi-level-marketing company in which a seller's earnings potential derives partly from profits on sales made by people the seller brings into the company.
Mr Ackman has accused the company of running a pyramid scheme, an illegal operation in which members make more money from recruiting new members than selling the products. Herbalife has denied this.
Mr Ackman's US$15 billion hedge fund has lost money so far on the short sale, which was implemented when Herbalife stock was around US$47, but he has personally vowed to continue fighting the firm. Regulators have so far not revealed the findings of their investigations.