This page has been archived and commenting is disabled.

Bill Ackman Faces FBI Probe Over Possible Herbalife Stock Manipulation

Tyler Durden's picture




 

Herbalife stock is up over 5% after hours after WSJ reports Bill Ackman (among others) made false statement about Herbalife's business models to regulators - in order to spur investigations into the company and lower its stock price. This comes just months after Ackman kinda-sorta-didn't-really insider-trade in the Allergan 'scam' that we detailed here. We suspect Whitney Tilson (and his Lumber Liquidators positions) is getting a little nervous now.

 

As The Wall Street Journal reports,

Federal prosecutors and the Federal Bureau of Investigation are probing potential manipulation of Herbalife Ltd. stock and have interviewed people hired by hedge-fund billionaire William Ackman, who has led a long-running campaign against the nutritional-products company, people familiar with the matter said.

 

Prosecutors in the Manhattan U.S. attorney’s office and New York field office of the FBI have conducted interviews and sent document requests in recent months in connection with the investigation, which is looking into whether people, including some hired by Mr. Ackman, made false statements about Herbalife’s business model to regulators and others in order to spur investigations into the company and lower its stock price, the people said. Mr. Ackman’s firm, Pershing Square Capital Management LP, has made a huge bet on Herbalife shares declining.

 

One of the people familiar with the matter said investigators are scrutinizing public statements and allegations relayed to regulators by the array of consultants and activists who have lobbied against Herbalife as well as any connections or potential collaboration between those people and Pershing Square.

 

Neither Mr. Ackman nor Pershing Square has been served with a subpoena or been visited by FBI agents in connection with the probe, another person familiar with the matter said. The investigation could end with no charges being filed.

 

Market manipulation can be a fraught area of the law, legal experts say. Attempting to discredit a company, even through false statements, isn’t illegal, nor is paying others to make such statements on your behalf. Market manipulation cases rise and fall on the “intentionality and deliberateness” of making false statements to affect a stock price, said Columbia Law School Prof. Daniel Richman.

 

In a statement, a Pershing Square spokesman said the firm was proud of “exposing the pervasive victimization by Herbalife of millions of people and would welcome any scrutiny of those efforts.”

 

We have been completely transparent about our position and our research, and we have acted lawfully in every respect,” he said.

 

Herbalife Executive Vice President Alan Hoffman said in a statement that Mr. Ackman and Pershing Square had spent tens of millions “orchestrating a false and fabricated attack against Herbalife.”

 

“Mr. Ackman has a $1 billion bet against Herbalife and a direct financial interest in hurting our company,” Mr. Hoffman said.

But Herbalife may be just the tip of Ackman's regulatory worries iceberg, because while Herbalife is 2013 news, it was his "legal" collusion with Valeant (or rather its balance sheet as leverage) against Allergan that deserve much more attention. This is what we previously noted regarding Allergan scam...

if the SEC is indeed serious about getting to the bottom of the Allergan insider-trading scam, is it also looking into just how these hedge funds decided to buy into Allergan in a quarter in which the stock soared on the Valeant/Ackman news?

 

Because while it is perfectly legal if these funds did their homework and rather "mysteriously" all decided to buy into the stock at the same time, or put on M&A arbs after the hostile bid announcement, one wonders just how legal it would be if one or more of these investors only bought AGN stock after getting a "sure thing" tip from Ackman that he was about to go activist on Allergan with Valeant money, something which is certainly illegal.

 

All that said, we aren't holding our breath on the SEC actually doing its job for once, and certainly not before Pershing Square goes public. After all can't hinder "capital formation" in these here unrigged markets.

 

* * *

 

Presenting exhibit A: this is the list of hedge funds and prop trading desks that according to Bloomberg (and CapIQ) announced brand new and quite material stakes, in Allergan, after building up a position some time in the second quarter, having no holdings as of the first quarter.

 

Who knows: perhaps the FBI actually has the guts to do what the clearly corrupt SEC will dare: catch real crime.

Somewhere Carl Icahn - who has "kissed and made up" with Ackman - is having a close-to-last laugh we suspect.

 

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Thu, 03/12/2015 - 18:08 | 5883275 buzzsaw99
buzzsaw99's picture

wrong cufflinks?

Thu, 03/12/2015 - 18:34 | 5883371 Creepy A. Cracker
Creepy A. Cracker's picture

Please.  Small time stuff.  Investigate the Fed and the U.S. Government for market manipulation.

Thu, 03/12/2015 - 18:54 | 5883428 nuubee
nuubee's picture

You can't be accused of manipulating something you own.

Thu, 03/12/2015 - 22:56 | 5884091 weburke
weburke's picture

ackman admitted he was a dunce. maybe he didnt pay his dues? some billionaires dont know they have to pay up ! 

Thu, 03/12/2015 - 18:09 | 5883277 Itchy and Scratchy
Itchy and Scratchy's picture

His shorts will be squeezed in the slammer!

Thu, 03/12/2015 - 18:13 | 5883294 First There Is ...
First There Is A Mountain's picture

In the slammer? Bwwwwwhaaaaaaahaaaaaaaaa. Bitch, please. Ackman doing hard time along with all the other white collar criminals who very nearly brought down the global economy? 

Thu, 03/12/2015 - 18:14 | 5883301 Itchy and Scratchy
Itchy and Scratchy's picture

Don't confuse the issue with facts!

Thu, 03/12/2015 - 18:10 | 5883281 davidalan1
davidalan1's picture

Icahn wins again....lmao..

 

https://www.youtube.com/watch?v=jj0iJK3BQFE

Thu, 03/12/2015 - 18:50 | 5883413 disabledvet
disabledvet's picture

"We're in the business of suing people.

 

And the FBI supports this venture.

 

The Secret Service...not so much."

Thu, 03/12/2015 - 18:13 | 5883284 HelluvaEngineer
HelluvaEngineer's picture

Wait, so the entire friggin' business model of this turd is a pyramid scheme and they are investigating the guy who lost his shirt shorting it?  Sounds about right.

Thu, 03/12/2015 - 18:20 | 5883313 booboo
booboo's picture

He should have consulted with David Einhorn before embarking on his mission.

Thu, 03/12/2015 - 18:23 | 5883330 nuubee
nuubee's picture

In a world of ponzi, the unregulated ponzi will be pwned.

Thu, 03/12/2015 - 20:12 | 5883644 tarsubil
tarsubil's picture

No shit. This is just bizarro.

By the way, herbalife isn't completely a ponzi scheme. MLM, which I researched when a friend asked me to join him in one for energy/cell phone sales for the low price of $400+, has the salesforce in a ponzi scheme and then they use the profits from this ponzi to cut prices on the somewhat marginal product. While the sale of the product is done in a regular fashion, the whole shitty business goes tits up when the sales force ponzi reaches sucker saturation.

Fri, 03/13/2015 - 01:01 | 5884252 rehypothecator
rehypothecator's picture

If it goes tits up when the market becomes saturated ... it's a pyramid scheme.  The cell phone market is pretty saturated (with ~90% cell phone ownership in the general population) but cell companies don't go tits up because they actually produce a product that customers are willing to continue buying.  In a pyramid scheme, you always need new customers.  So, what's Herbalife's business model, again?  (Not that the SEC nor the FBI cares.)  

Fri, 03/13/2015 - 09:15 | 5884776 tarsubil
tarsubil's picture

This is how they trick people into thinking it isn't a ponzi scheme. They don't so much care about new customers, they care about new sales reps.

Thu, 03/12/2015 - 18:11 | 5883285 kaiserhoff
kaiserhoff's picture

FBI?  Why not the SEC, whose job it is?  Regulators waking up?

Wake me for the frog walks.

Thu, 03/12/2015 - 18:12 | 5883290 nmewn
nmewn's picture

But who will investigate the investigators?

Thu, 03/12/2015 - 18:23 | 5883328 cornfritter
cornfritter's picture

divvy it up honkie! :-)

 

Thu, 03/12/2015 - 18:12 | 5883291 NoDebt
NoDebt's picture

Like I said when the Herbalife/Ackman story first broke, there is NOTHING more dangerous in the investing world than a "true believer".  The Allergan thing was far more egregious, in my opinion, but it was HLF where Ackman went all indignant and started letting his ego call the shots.  If he ever burns for any of the nasty shit he's done (unlikely), it will be for the HLF stuff.

 

Thu, 03/12/2015 - 18:12 | 5883292 CunnyFunt
CunnyFunt's picture

I suppose he's not "too big to jail."

Thu, 03/12/2015 - 18:13 | 5883297 kill switch
kill switch's picture

The FBI??? What the fuck,,, SEC Maybe??? I'm sorry it's porn time in the city..

Thu, 03/12/2015 - 18:14 | 5883299 knukles
knukles's picture

George Bailey goes to prison in "It's a Herbalife."

 

                  "We manipulated some folks"

Thu, 03/12/2015 - 18:19 | 5883311 heisenberg991
heisenberg991's picture

They don't jail billionaires.

Thu, 03/12/2015 - 18:21 | 5883317 Gold is money -...
Gold is money - and bullets if your out of lead's picture

This like all the other shit thrown at him won't stick.

Thu, 03/12/2015 - 18:23 | 5883331 Seasmoke
Seasmoke's picture

Note to self. Never become a whistleblower when the Tribe Herd is making Billions $$$$$

Thu, 03/12/2015 - 18:35 | 5883351 Fukushima Fricassee
Fukushima Fricassee's picture

Obama, his cabinet, all his Czars and most of congress past and present, the big fat bankers should all join this little shit in a federal prison cell. Insider trading is done by all , he must have shorted his contribution checks.

Thu, 03/12/2015 - 19:31 | 5883532 Berspankme
Berspankme's picture

Ackman looks like Obama's type. Cakeboy

Thu, 03/12/2015 - 18:38 | 5883385 WTFUD
WTFUD's picture

Herpes Life is a ponzi and the lady who dropped several of their products off every other weekend to my overweight missus has vacated her position, even relinquishing the company logo'd vehicle ( hideous tiny dinky thing ) to pursue a similar position with a competitor.

I said to my missus on many occasion in front of her ' life coach ' that she should sue HerpesLife albeit that my other advice on not to throw a plate and a half of chicken and chips down her gregory around midnight and ten minutes before she went to bed went unheeded.

Thu, 03/12/2015 - 18:50 | 5883416 Chad_the_short_...
Chad_the_short_seller's picture

Want a stock tip? Get long some LL before Their founder goes on CNBC tomorrow at noon. 27 million float, 47% of that float is short, stock crashed from $60 to 29 in just a few weeks on bs allegations that ol founder will "smooth out" tomorrow on national television, causing a MASSIVE short squeeze. Same shit is going on with LL as did Herbalife. Some hedgefund guy comes in and tries to manipulate the stock, and did a GREAT job, but in the end, it will cause a MASSIVE short squeeze. Yes, I went long LL today and can't wait for tomorrow and all of next week.

Thu, 03/12/2015 - 19:25 | 5883513 Deathstar
Deathstar's picture

HERBalife?  WTF is this?  A new weed producer?  J/K

Thu, 03/12/2015 - 20:00 | 5883613 SmittyinLA
SmittyinLA's picture

I bet Herbalife has some govt contracts, exgangbanger LA Mayor Villaraigosa is on their payrol, I can't imagine him not using his influence to get the company money, it would be out of character for him NOT to loot.

Villar comes with SEIU political protection too, he is literally the Mexican mafia leadership looter wing of SEIU, Obama's base, Herbalife's primary consumers/MLMchumps are literally Obama's base (they milk them like a cows) they push Herbalife on Latinos spoofing them into the belief that Herbalife can can prevent diabetes, a genetic disease.

 

 

Thu, 03/12/2015 - 20:58 | 5883760 Vinividivinci
Vinividivinci's picture

Another day, another lying, cheeting MoFo...whatever.
ps...what the fuck is a herbalife ?

Thu, 03/12/2015 - 20:58 | 5883762 WTFUD
WTFUD's picture

I reckon a good 30% of these listed companies are shell, just hft algos run via Gold/jpm additional software programmes.

Neither do i for one second believe anything it says on the packet.

Can't stand Ackman ( no relation to Gene Hackman ) just preferring him to Dr. Death Icahn who is obviously in bed with Goldman & Sons to keep this ponzi stock at the races.

All these potions and lotions with come and get me names like dyralite s/c smell iffy pun intended are for scatterbrained suckers who need only exercise & eat decent to be healthy.

Other than additional Vit C i buy Royal Jelly and swear by it.

Mind you don't take my word as gospel as i'm bald and last time i counted only had half my own teeth.

Thu, 03/12/2015 - 21:05 | 5883782 Bunga Bunga
Bunga Bunga's picture

FBI probe? What the fuck went wrong with them this time?

Thu, 03/12/2015 - 21:19 | 5883796 Prometheus Unbound
Prometheus Unbound's picture

It says a lot more about who owns the Law in America when people are prosecuted for calling out Herbalife as a scam than anything else.

BY THE FBI. Remind me when they were in charge of policing financial malfeasance? Didn't see them on the HSBC case, now did we?

I have little respect for Ackman, but he was correct about this company. Dig very much deeper - such pyramid MLM schemes are the only vestige left of the "American Dream" that you can sucker immigrants and the poor into these days.

 

I might even be able to dig up some juice.

Ah, yes:

ftalphaville.ft.com/2013/11/27/1705132/please-welcome-the-secretary-of-state-for-herbalife/

https://www.youtube.com/watch?v=QV7JZbKWwWA

http://www.telegraph.co.uk/finance/personalfinance/10935129/Herbalife-bo...

 

Yes. Because 500,000 children "were worth the cost" and Herbalife is a great business. You need a special amount of insanity to hold such positions, a darker blend and lack of humanity...

 

You'll note that even the "right-wing" pro-business press in the UK are happy to call Herbalife a pyramid scheme. Should make you wonder.

Do NOT follow this link or you will be banned from the site!