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Hedge Fund Billionaire Claims Herbalife Ltd. (NYSE:HLF) Is Seeking Criminal Lawyers

On 13 April, 2015 at a New York conference hedge fund billionaire Bill Ackman made a controversial statement. As per the latter, the senior management of nutritional drink firm Herbalife Ltd. (NYSE:HLF) have recruited or are looking to recruit their criminal defense counsel.

Herbalife spokesman Michael Gutierres issued a prompt denial rubbishing the allegation as a typical stunt to encash money via Ackman’s $1 billion short position.

Herbalife levels charges of opportunism

Gutierrez called the allegation completely untrue and a tactic to bring down Herbalife’s stock price in order for Ackman to fatten his wallet. He also pointed out that the FBI (Federal Bureau of Investigation) and the DOJ (Department of Justice) were presently conducting a criminal investigation on Ackman’s campaign.

Herbalife is being probed by the Federal Trade Commission, the DOJ as well as the Securities and Exchange Commission.

According to Ackman the fact that the senior management of Herbalife is soliciting criminal lawyers point to those probes gathering momentum. He suggested that certain people in Herbalife might face prison sentences. Ackman attributed his information to be from a credible source while not disclosing it.

Ackman admitted recently on television that he has not been summoned in the FBI probe into alleged manipulation. However, he confirmed that some people associated with Global Strategy Group a consultancy firm whose services he availed of were subpoenaed.

Ackman’s scheme to profit

Ackman shorted Herbalife Ltd. (NYSE:HLF) three years ago, describing it as a pyramid scheme. But he was unable to prove his investment and make money on the short till date. Herbalife has fought back fiercely and consistently repudiated that it is a pyramid scheme. The firm has received support from other high-profile hedge fund managers such as Carl Icahn, who has membership in Herbalife’s board.

Ackman shorted the stock around $47 a share three years ago. He requires the shares to plunge to the mid-30s or lower to make profits.

Published by Duncan Oleinic

Duncan Oleinic is from New Yourk. After graduating with a degree in physics, he began his career as an analyst in a broking firm. Through this experience he was able to advance to the role of correspondent for a U.S based financial news provider, where he worked from 2001 to 2007. He subsequently joined a merchant banking firm as a financial analyst focused on valuing unlisted companies in the sub-continent. Over the course of his two years here, he performed valuations of several media companies which were later acquired by peers.

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