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Herbalife Tumbles 14% On News Criminal Probe Has Been Launched Into Company

Tyler Durden's picture




 

The Herbalife drama - perhaps the biggest billionaire pissing contest of 2013 - just got excting again, following FT news that a criminal probe has been launched into Herbalife. "The US Department of Justice and the Federal Bureau of Investigation are investigating Herbalife, the multi-level marketing company that hedge fund manager Bill Ackman has alleged is a pyramid scheme, according to people familiar with the matter. The criminal investigation by the FBI and US attorney’s office in Manhattan raises the stakes for Herbalife, which is already facing civil inquiries from multiple government agencies that are looking into the Los Angeles-based company and its associated network of independent distributors."

One can't help but wonder if those "people familiar" have a material stake in Pershing Square, which as is widely known has an extensive short and put position in HLF shares, which as expected tumbled by 14% on the news.

Ironically the selloff started earlier following a Gasparino tweet saying that HLF is cooperating with 20/20 on a possible expose.

Still, as the FT notes "The inquiry may not lead to any charges. Herbalife has not been accused of any wrongdoing" and additionally after the FT story broke, Gasparino added the following:

FT adds:

Herbalife said: “We have no knowledge of any ongoing investigation by the DoJ or the FBI, and we have not received any formal nor informal request for information from either agency. We take our public disclosure obligations very seriously. Herbalife does not intend to make any additional comments regarding this matter unless and until there are material developments.”

The probe, if confirmed, will merely be the latest headache following previous news that the FTC is investigating the company on a civil basis.

And then, moment ago, Herbalife issued the following statement which merely repeated what the FT had already noted:

We have no knowledge of any ongoing investigation by the DOJ or the FBI, and we have not received any formal nor informal request for information from either agency. We take our public disclosure obligations very seriously. Herbalife does not intend to make any additional comments regarding this matter unless and until there are material developments.

Of course, the question remains: will Carl Icahn - for whom the outcome of the Herbalife spat with Bill Ackman is much more about personal pride than anything - now be forced to LBO the DOJ and the FBI in addition to the FTC just to make sure there are no roadblocks in his quest to crush Ackman.

It remains to be seen, although rumor has it Jefferies already has a highly confident letter it can underwrite the B2/B- rated junk bonds needed to take private the US Department of Injustice and the FBI.

 

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Fri, 04/11/2014 - 16:18 | 4648857 HedgeAccordingly
HedgeAccordingly's picture

this should be good . love the gas..

 

http://hedge.ly/1oRfZzg 

Fri, 04/11/2014 - 16:21 | 4648875 ZerOhead
ZerOhead's picture

Guilty parties to receive an Herbalife sentence...

Fri, 04/11/2014 - 16:25 | 4648887 knukles
knukles's picture

...for the rest of their all natural, pure, organic, gluten free lives...

(which has not been reviewed, paid a shits worth of attention to, considered reasonably , nor will it be on the recommendation by Big Agriculture and Big Pharma to the FDA)

 

Oh yeah, duh...
  -FDA

Fri, 04/11/2014 - 16:47 | 4648933 ZerOhead
ZerOhead's picture

I don't know about it helping you to live longer but constantly ingesting that soy crap for breakfast, lunch and dinner can certainly make a month feel like a year...

Fri, 04/11/2014 - 16:48 | 4648965 Divided States ...
Divided States of America's picture

Next filing released for Q1 2014 (3/31/14), I am sure Icahn's holdings in HLF will be down to 100 as in 100 shares. Effin jbag

Fri, 04/11/2014 - 17:12 | 4649063 Thought Processor
Thought Processor's picture

 

 

One look at their business structure and you think "Why is this not illegal?"

 

Then you look at our Government and you think "Oh, that's why."

Fri, 04/11/2014 - 17:15 | 4649080 TruthInSunshine
TruthInSunshine's picture

Guaranteed that iCon went short this awhile ago while talking it up.

Carl iCon tweets his pump & dump trash on his Samsung tablet while laughing @ the peeps believing in the Herbalife business model -that depends on guilt-tripping relatives and friends to buy snake oil from you.

Herbalife is similar to Girl Scout Cookies, except its products aren't for a charity, taste like shit, don't do shit, and are unfit for their intended purpose and booking fake sales.

Fri, 04/11/2014 - 17:26 | 4649121 Thought Processor
Thought Processor's picture

 

 

Carl is a trader, nothing more.   Why he get's labeled as an investor of any kind is beyond me.  He's as short term profit oriented as it gets (without going into HFT land that is).

 

 

Fri, 04/11/2014 - 18:05 | 4649252 TheFourthStooge-ing
TheFourthStooge-ing's picture

Alas, poor MDB has made an "investment" in selling Herbalife products. I hope he hasn't gone all-in, as it would suck bigtime to get stuck with a garage full of that stuff.

Fri, 04/11/2014 - 17:22 | 4649104 Thought Processor
Thought Processor's picture

 

 

I'll add this-

 

I think Ackman has been investigating and compiling evidence of fraud against HLF on his own dime (probably not hard to do, just absorb the legal fees).  He then confronted the US Gov. with the evidence and forced them to act.   

He can put a lot of pressure on the Gov. by doing this.  If he has a rock solid case and hands it to them on a silver platter they can't do nothing.  

My guess is that this is what has happened.

 

 

Fri, 04/11/2014 - 17:38 | 4649156 813kml
813kml's picture

It's a tradeoff, you can pass the time by playing with the perky new bitchtits that sprouted from soy's estrogen-like behavior.

Fri, 04/11/2014 - 23:28 | 4650140 HardAssets
HardAssets's picture

I don't know anything about whatever Herbalife sells . . . but the feds are investigating this as a 'pyramid scheme' and the fed reserve fiat funny money pyramid scheme doesnt get a glance ?

Fri, 04/11/2014 - 16:40 | 4648941 0b1knob
0b1knob's picture

"LBO the DOJ and FBI in addition to the FTC"'

I'm afaid Goldman Sucks bought them out years ago.

Fri, 04/11/2014 - 16:19 | 4648858 syntaxterror
syntaxterror's picture

If all ponzi schemes were eliminated the entire market would collapse.

Fri, 04/11/2014 - 16:31 | 4648911 Jumbotron
Jumbotron's picture

"If honesty were suddenly introduced into American life, the whole system would collapse."

George Carlin

Fri, 04/11/2014 - 17:06 | 4649047 Thought Processor
Thought Processor's picture

 

 

It's both funny and true.  Sad times indeed.

 

RIP George.

Fri, 04/11/2014 - 16:32 | 4648914 Major Major Major
Major Major Major's picture

No shit... that is what keeps Eric Holder up at night and has the entire Justice Department by the balls... among other things.

Fri, 04/11/2014 - 16:25 | 4648890 Rainman
Rainman's picture

There seems to be a growing number of illuminati out there who don't seem to know nuthin.

Fri, 04/11/2014 - 16:28 | 4648901 q99x2
q99x2's picture

Couldn't they come out with a marijuana line of muffins or something. I'm not sure what the company does.

Fri, 04/11/2014 - 16:31 | 4648910 Rehab Willie
Rehab Willie's picture

4pm Monday FBI & DOJ announce all clear.

2 the moon Tuesday.

Fri, 04/11/2014 - 16:32 | 4648912 JustObserving
JustObserving's picture

Wake me up when a probe is launched into Icon and his numerous criminal activities.  

In a fascist, police state, justice serves the needs of the 0.1%.

Look at Steve fucking Cohen keep nearly 90% of the $10 billion that he stole from American investors.

While we have the highest percentage of the populace in prison in the world, Wall Street criminals walk free and wealthy.

 

 

Fri, 04/11/2014 - 16:51 | 4648971 Divided States ...
Divided States of America's picture

SAC is a prime example of why a Non-Jew should never work for a Jew...when times are good, he makes billions while you get millions (if you are lucky) PLUS you do all the hard work. when times are tough, they lay you off. when times are treacherous for them, they throw you under the bus like a curry loving criminal.

Fri, 04/11/2014 - 16:38 | 4648929 GrinandBearit
GrinandBearit's picture

I work in the food/health/nutrition industry.  A job recruiter sent me a job posting for HLF... it was a an absolute joke.

The company is definitely a multi-level marketing ponzi scheme.

Ackman is going to do VERY well if he can hold on.

 

Fri, 04/11/2014 - 16:41 | 4648944 Smiley
Smiley's picture

Multi-Level-Marketing isn't criminal it is a hilarious way to take money from stupid people.  What's the problem?

Fri, 04/11/2014 - 18:21 | 4649301 Bioscale
Bioscale's picture

I also wonder why this hatred against a diet shake shit. They produce a product, they have apparently enough satisfied customers that prefer this shit to other shit. What's the news here?

Fri, 04/11/2014 - 16:49 | 4648969 Duc888
Duc888's picture

 

 

"If all ponzi schemes were eliminated the entire market would collapse."

True, but redundant.  "The Market" = Ponzi

 

Kinda like sayin' if all the water was taken away things would be dry.

 


Fri, 04/11/2014 - 17:13 | 4649074 Georgia_Boy
Georgia_Boy's picture

Big blowhard egos preening like they're looking out for people like me ... yawn. I have little sympathy for people who get sucked into a MLM scheme, they know what the score is and they're doing it anyway. They're like the people who took out half mil liar loans in 06.

My wife has a friend who's doing it, she's always blowing up my wife's facebook with thinly veiled ads for diet shakes. She annoys the piss out of everyone with her self-serving personality and narcissism, this is who these billionaires and Feds claim to be trying to protect? Screw them, they deserve what they get. I have no love for MLMs but none for billionaire shorts and shake pushers either. No good guys here.

Fri, 04/11/2014 - 17:22 | 4649110 adr
adr's picture

Herbalife may have a big building in LA but the company is based out of a PO Box in the Cayman Islands.

Fri, 04/11/2014 - 17:45 | 4649186 withglee
withglee's picture

The criminal investigation by the FBI and US attorney’s office in Manhattan raises the stakes for Herbalife, which is already facing civil inquiries from multiple government agencies that are looking into the Los Angeles-based company and its associated network of independent distributors.

Frankly, I think finding out why WTC7 fell down is more important than this.

Fri, 04/11/2014 - 19:31 | 4649472 Dadburnitpa
Dadburnitpa's picture

And Corzine walks free.

Fri, 04/11/2014 - 21:34 | 4649829 Decimus Lunius ...
Decimus Lunius Luvenalis's picture

It's an election year so of course there is an investigation.  

Sat, 04/12/2014 - 00:33 | 4650240 Son of Loki
Son of Loki's picture

I prefer Snake Oil to Erb 'o Life

Sat, 04/12/2014 - 00:57 | 4650273 Aussiekiwi
Aussiekiwi's picture

A pan of bacon, three fried eggs, toast (wholemeal of course) and cheddar cheese was my breakfast this morning, I did put a little piece of parsley on top, because you have to have your greens!, I guess thats herbal.....feel fantastic.

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