BOSTON, Feb 28 (Reuters) - Billionaire investor William Ackman, who has long claimed Herbalife Ltd is a fraud, on Friday said he would provide proof next month that the nutrition and weight-loss company is running a pyramid scheme in China.
Ackman launched his latest broadside against Herbalife on Friday morning in a short press release that promises details about his investigation into the company’s business in China. He will hold a conference call on March 11.
“The report will show that Herbalife’s business in China operates much like the company’s business in the rest of the world - as a pyramid scheme,” the release said.
Herbalife has steadfastly denied running a pyramid scheme, where participants earn more in recruiting new members into the operation than from selling the company’s products outside of the network.
Herbalife did not immediately respond to requests for comment on Friday morning.
For more than a year, Ackman’s $12 billion Pershing Square Capital Management hedge fund has bet just over $1 billion that Herbalife’s share price would eventually fall to zero amid regulatory scrutiny. So far no regulator has acted, and the bet has lost money, ranking as the biggest loser in the fund’s 10-year history.
Shares of Herbalife were down 0.1 percent at $66.93 in morning trading in New York.
But Ackman has said he remains optimistic. He and his staff have met with U.S lawmakers and regulators to push their case, and civil rights groups have joined in the battle against the company by claiming that its promises that people can earn money fast by becoming a distributor are untrue.
Ackman has highlighted some of Herbalife’s top distributors on a website in the last several weeks.
Friday was also the deadline set by U.S. Senator Edward Markey for the Securities and Exchange Commission and the Federal Trade Commission to respond to his request that the two regulators probe the company.