| NEW YORK
NEW YORK Jan 21 A U.S. court has dismissed a
short-seller's lawsuits accusing activist investor Carl Icahn
and three large banks of perpetuating a pyramid scheme at
nutritional products company Herbalife Ltd.
In decisions made public on Tuesday, U.S. District Judge
Louis Stanton in Manhattan said the plaintiff, Daniel Ravicher,
failed to show that Icahn owed him a duty not to promote
Herbalife, or that the billionaire's actions caused his losses.
Stanton also dismissed similar claims against Bank of
America Corp, JPMorgan Chase & Co and Wells
Fargo & Co, which Ravicher had accused of aiding
Herbalife's alleged fraud by providing $1.2 billion of
The judge said the defendants' actions, even if proved, "are
so remote from Ravicher's alleged injury as to demonstrate the
implausibility of Ravicher's claim."
Ravicher, a Florida lawyer, said he lost more than $75,000
on his short position in Herbalife, a bet that its stock price
would fall, because Icahn and the banks helped prop up the
company and save it from collapse.
He said he bought put options on Herbalife stock around the
time that billionaire hedge fund investor William Ackman in
December 2012 announced his own short bet. Those options became
worthless when they expired in November.
Stanton, however, said that Ravicher could prevail only if
he could show that his purchase of the options imposed a duty on
Icahn and the banks not to help Herbalife.
"That is not only a counter-intuitive proposition, it
violates a principle ("volenti non fit injuria") that one who
knowingly and voluntarily risks danger cannot recover for the
resulting injury," Stanton wrote, in decisions dated Friday.
Neither Ravicher nor Icahn responded immediately on Tuesday
to requests for comment.
Herbalife was not named as defendant. In December, it said a
new audit resulted in no changes to its financial statements.
Also last month, Ackman said he and his firm Pershing Square
Capital Management were sticking by his $1 billion short bet on
Herbalife. People familiar with the fund have said the bet led
to as much as $700 million of losses.
In afternoon trading, Herbalife shares were up $2.18, or 3.1
percent, at $72.38 on the New York Stock Exchange. One year ago
they traded at $44.14.
The case is Ravicher v Icahn, U.S. District Court, Southern
District of New York, No. 13-01666; and Ravicher v. Bank of
America Corp et al in the same court, No. 13-03908.