People linked to Pershing Square probed over Herbalife: Ackman

Admin   |   17 March, 2015   |   1283   |   3980

Billionaire investor Bill Ackman said some people hired by a consulting group working for his hedge fund had received subpoenas from federal agencies investigating possible manipulation of Herbalife Ltd's stock.

Herbalife's shares rose more than 15 percent after the Wall Street Journal reported late on Thursday that federal prosecutors and the FBI were probing whether false statements were made in order to spur investigations into the company and lower its stock price.

Ackman, whose hedge fund Pershing Square Capital Management LP is short on Herbalife's shares, said in a CNBC interview on Friday that he could not be certain if people hired by Global Strategy Group had made false statements to regulators.

Ackman has been betting against Herbalife's shares since 2012, claiming the company is a pyramid scheme - where new investors unwittingly fund the profits of older investors.

The investor said in January that the effective value of his bet on Herbalife was $1.2 billion.

Regulators began investigating the company early last year. Since then the stock has fallen about 50 percent. More than a third of the company's shares are held short, according to Thomson Reuters data.

Pershing Square said on Friday that neither Ackman nor the fund had been contacted by federal agencies.

A Global Strategy Group spokesman said that the consultancy was not a target of any investigation. "GSG has never made false statements about Herbalife, nor do we believe anyone else has either," he said.

Ackman reiterated his stance on the company.

"Herbalife is a pyramid scheme. It is a criminal enterprise," Ackman told CNBC, adding that the company was yet to dispute the charges made by Pershing Square.

Ackman said he was not worried about the investigation leading back to him. "People guilty of crimes don't go on network television the morning after a story appears in the Wall Street Journal." (http://on.wsj.com/1L3Qw0J)

Herbalife said in a statement on Thursday that Ackman had spent over $75 million on a "false and fabricated attack against Herbalife ... to enrich himself.

"Ackman said he had not spent more than $50 million in his campaign against Herbalife.

The company's shares were up 8 pct at $35.84 in afternoon trading. Pershing Square's Amsterdam-listed shares fell 3 percent.