Herbalife, NuSkin Drop Ahead of FTC Pyramid Scheme Announcement
Shares of Herbalife (NYSE: HLF) dropped on Monday, falling over 8 percent in early trading. The Federal Trade Commission (FTC) will host a press conference later today in Kentucky to announce a major action against an allegedly illegal pyramid scheme.
Bill Ackman of Pershing Square has called Herbalife a “well-managed pyramid scheme” and declared that the company's stock would fall to $0. NuSkin (NYSE: NUS), like Herbalife, is a publicly traded multi-level marketer. Ackman has made no allegations against NuSkin.
As of right now, it is unknown as to whether or not the FTC's afternoon announcement will directly concern Herbalife or NuSkin, but the market appears to be trading as if it will. Herb Greenberg of CNBC downplayed that possibility noting that the location -- Kentucky -- wouldn't fit with the agency taking action against Herbalife, which is based out of LA.
Ackman's Herbalife thesis was given more press on Friday when he debated rival hedge fund magnate Carl Icahn live on TV.
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