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Bill Ackman Calls Herbalife's Chinese Biz 'Illegal'

Mar 11, 2014
Jing Chen

When hedge fund manager Bill Ackman speaks, the investment community listens.

The New York Times reported that shares in weight management product company Herbalife fell by more than 2% on Tuesday after Ackman, the founder and CEO of New York-based Pershing Square Capital Management, accused it of carrying illegal operations in China.

According to the Times, Ackman—during a two-hour conference call—pointed to documents obtained from a former Herbalife employee which he used to argue that the company’s Chinese operations were identical to its business in other countries, such as the U.S. Chinese laws prohibit multilevel marketing and direct marketing.

Herbalife responded to Ackman’s allegations, claiming that it “remains confident in its business in China, which is built on customers enjoying and benefiting from our nutrition products each and every day.”

This is not the first time the Ackman has accused the company of shady business. The hedge fund manager revealed in 2012 that he was shorting Herbalife, calling it a “pyramid scheme” and criticized the company for inflating the suggested retail price of its products and overstating its retail sales in public filings. Herbalife shares plummeted nearly 15% as a result.

Founded in 2004, New York-based Pershing Square manages $10 billion in assets.


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