March 10 William Ackman's hedge fund Pershing
Square Capital Management LP said it would unveil on Tuesday
details about Herbalife Ltd's violations in China as the
activist investor sharpened his attack against the nutritional
Ackman has called on regulators to investigate Herbalife's
distribution model which he calls a "pyramid scheme," where a
company makes most of its money by recruiting distributors
rather than selling products to real customers.
Herbalife has vehemently denied operating a pyramid scheme.
Ackman's "accusations are provably false," Chief Financial
Officer John DeSimone said in a New York Times article on
Pershing Square responded to the article by saying Herbalife
failed to address a number of questions, including those about
its sales practices and distributor remuneration.
"Herbalife has failed to respond to basic questions that we
and others have continued to raise," the fund said in a
The firm said it would release a presentation on Tuesday
highlighting the company's violations of laws in China.
Billionaire investor Ackman has taken a $1 billion short
position against Herbalife, betting that the company's share
price will eventually fall to zero.
Ackman's latest volley comes nearly two months after China's
regulators launched probes into the Chinese operations of U.S.
based skincare products maker Nu Skin Enterprises Inc,
which operates a business model similar.
Herbalife raised its current-quarter forecast last month
after sales in China jumped more than 120 percent in the fourth
quarter of 2013.
Herbalife's shares closed up 2.2 percent at $66.16 on the
New York Stock Exchange on Monday.