Tables Turn: The FBI Is Investigating Bill Ackman And His Campaign Against Herbalife
The FBI and federal prosecutors are interviewing people related to hedge-fund manager Bill Ackman for potential Herbalife stock manipulation, reports The Wall Street Journal.
They’ve asked for documents related to the stock. Neither Ackman nor his hedge fund, Pershing Square, have been served with a subpoena.
Ackman has been publicly shorting Herbalife since December 2012. He has said that the multilevel-marketing nutrition firm is a pyramid scheme and that his hedge fund, Pershing Square, is shorting its stock to zero.
Here’s The Journal on exactly what investigators are trying to figure out in this case:
Prosecutors in the Manhattan U.S. attorney’s office and New York field office of the FBI have conducted interviews and sent document requests in recent months in connection with the investigation, which is looking into whether people, including some hired by Mr. Ackman, made false statements about Herbalife’s business model to regulators and others in order to spur investigations into the company and lower its stock price, the people said. Mr. Ackman’s firm, Pershing Square Capital Management LP, has made a huge bet on Herbalife shares declining.
One of the people familiar with the matter said investigators are scrutinizing public statements and allegations relayed to regulators by the array of consultants and activists who have lobbied against Herbalife as well as any connections or potential collaboration between those people and Pershing Square.
Add this investigation into Ackman’s involvement with Herbalife to formal investigations already opened and ongoing by the SEC and FTC.
At issue in matters like this is whether Ackman intentionally and deliberately made false statements to affect Herbalife’s stock price. Ackman has been open about his aggressive action on this matter, admitting that he paid an Herbalife whistleblower for going public about issues within the company at one point, but that isn’t considered stock manipulation.
In a statement, Pershing Square told The Journal that it had acted transparently and fairly.
Herbalife’s stock is up 5% in after-hours trading.
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