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Bill Ackman - Staking $1 Billion That Herbalife Will Fail, Then Lobbying to Bring It Down

March 11, 2014 | About:
Canadian Value

Canadian Value

134 followers

WASHINGTON — At a Midtown Manhattan steakhouse last June, William A. Ackman, the activist hedge fund manager who had bet a billion dollars on the collapse of the nutritional supplement company Herbalife, offered his latest evidence to a handful of other hedge fund managers about why the company’s stock could soon plummet.

Mr. Ackman told his dinner companions that Representative Linda T. Sánchez, Democrat of California, had sent a letter to the Federal Trade Commission the previous day calling for an investigation of the company.

The commission had not yet stamped the letter as received, nor had it been made public. But Mr. Ackman, who had personally lobbied Ms. Sánchez and stood to profit if the company’s stock dropped as a result of the call for an inquiry, already knew what it said, and read from a copy of it that he had on his cellphone.

When Ms. Sánchez’s office ultimately issued a news release a month later, it was backdated as though it had been made public the day before Mr. Ackman’s dinner talk.

The letter was a small hint of Mr. Ackman’s extraordinary attempt to leverage the corridors of power — in Washington, state capitols and city halls — for his hedge fund’s profit after taking a $1 billion financial position called a short, a bet that will pay off only if Herbalife’s stock drops.

Corporate money is forever finding new ways to influence government. But Mr. Ackman’s campaign to take this fight “to the end of the earth,” using every weapon in the arsenal that Washington offers in an attempt to bring ruin to one company, is a novel one, fusing the financial markets with the political system.

Others have criticized the business practices of Herbalife, a company that sells vitamins and other health supplements through independent distributors, many of whom are lower-income Latinos or African-Americans. But Mr. Ackman’s attack is unprecedented in its scale, and Herbalife officials strongly deny his accusations that the company is a pyramid scheme that stays afloat by constantly recruiting new distributors.

To pressure state and federal regulators to investigate Herbalife, an act that alone could cause its stock to dive, his team has helped organize protests, news conferences and letter-writing campaigns in California, Nevada, Connecticut, New York and Illinois, although several of the people who signed the letters to state and federal officials say they do not remember sending them, an investigation by The New York Times has found.

His team has also paid civil rights organizations at least $130,000 to join his effort by helping him collect the names of people who claimed they were victimized by Herbalife in order to send the leads to regulators, the investigation found. Mr. Ackman’s team also provided the money used by some of these individuals to travel to Washington to participate in a rally against Herbalife last month.

Continue reading at the New York Times here

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Canadian Value
http://valueinvestorcanada.blogspot.com/

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Comments

DfiinancialH
DfiinancialH - 9 months ago

Ackman is an hypocrite, he pretends to be defending minority groups but truth is that he saw a window to manipulate regulators against herbailfe and he's lobbying to MAKE IT ILLEGAL. Herbalife is complying with existing laws and Ackman knows that what he's trying to do is manipulate the system. There are many good short sellers and then there are the enemies of business, people like Ackman who don't open a position based on reality but based on how they will change reality and facts to make a profit no matter what! Ackman is evil and he represents everything wrong about short selling, he should be charged of stock manipulation. He said what he had to say, we're in a democracy, now stop it! Let the FTC do his job! His show is stock manipulation at this point!

sww
Sww - 9 months ago

Did you ever listen to Herbalife conference call? Did you watch the explaination of their CEO & CFO on cnbc after Ackman exposed the company information?

DfiinancialH
DfiinancialH - 9 months ago

He can say whatever he wants, that's not my point. It doesn't matter what he has to say, we're in a democracy, say it, and then shut up and LET REGULATORS DO THEIR JOB!!! But this media show? One distributor exposed every day? Really? Is it a TV series? This is just some promotional campaign to scare retail investors out of the stock.

He's interfering with regulators and he's manipulating the stock, Icahn and Stiritz have stopped giving interviews now it's the time for the FTC to make the call, Ackman shuld learn from 2 professionals and do the same!

goforit
Goforit premium member - 9 months ago

Be interesting to find out the level of their contributions to the Obama campaign to get the Feds on board.

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