Bill Ackman Accuses Herbalife Of False Medical Claims

Outspoken activist Bill Ackman’s Pershing Square Capital unleashed its latest attack on nutrition company Herbalife Ltd HLF today. This time, Ackman’s accusations come in the form of a press release and accompanying video that was posted on Pershing’s anti-Herbalife website.
The claims
In the video, Pershing Square argues that Herbalife distributors have been making false and unverified claims about the health benefits of Herbalife products for more than 30 years. Pershing claims that these incidents are far from isolated, as they believe that even Herbalife CEO Michael Johnson is guilty of making statements about Herbalife products that violate FDA regulations.
The health benefit claims that Herbalife distributors are accused of making include the insinuation that Herbalife products help with and possibly cure medical conditions such as asthma, diabetes, hypertension, bronchitis, migraines, arthritis, weight loss, cellulitis, and high cholesterol. Pershing Square alleges that these claims are misleading and fraudulent and that distributors are regularly trained by the company to make the claims.
Battle of the billionaires
Ackman’s famous $1 billion short position in Herbalife was the center of media attention when Ackman butted heads with legendary activist investor Carl Icahn during a live interview on CBNC in 2013. Highlights of the interview included Icahn, owner of a 17 percent stake in Herbalife, referring to Ackman as “a crybaby in the schoolyard.” The two billionaires have since buried the personal hatchet, but the battle over Herbalife rages on.
The long-term future of Herbalife remains uncertain, but with the stock down nearly 50 percent year-to-date, clearly 2014 has been Ackman’s year.