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Herbalife getting personal with Ackman, notes J.C. Penney 'disaster'

May 03, 2013|By Stuart Pfeifer
  • Herbalife denies hedge fund manager's allegations that it is a pyramid scheme.
Herbalife denies hedge fund manager's allegations that it is a pyramid… (Mark Boster / Los Angeles…)

Things are starting to get personal in the battle between hedge fund manager Bill Ackman and Herbalife Ltd., the Los Angeles nutritional products company he’s accused of operating a long-running pyramid scheme.

Herbalife spokeswoman Barbara Henderson said today that Ackman is making false allegations about the company because he’s “increasingly desperate to distract the market from focusing on his J.C. Penney disaster.”

Ackman’s Pershing Square Capital Management owns nearly 18% of struggling J.C. Penney, which has seen its stock drop 12% this year.

Ackman declined to discuss J.C. Penney.

“We have sought to shine a spotlight on Herbalife because we believe it’s a pyramid scheme that has caused millions of people to lose billions of dollars and should be shut down,” Ackman said.

In December, Ackman launched a highly publicized attack on Herbalife, noting that nearly 90% of its independent distributors make no money, while a fortunate few get rich from recruiting others into the business. He bet $1 billion that the company’s shares would fall.

Herbalife denied the allegations, saying most of its distributors sign up to get discounts on products they personally consume and do not intend to profit.

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