Bill Ackman Accuses Herbalife Of Stock Manipulation

There doesn’t seem to be an end to Bill Ackman’s quest to bring Herbalife down. Despite the FTC recently reaching a settlement with the company, Ackman still thinks something isn’t right in Denmark when it comes to the nutritional supplement provider.

He is now accusing the company and its largest shareholder Carl Icahn of stock market manipulation. He made his allegations during a presentation to his investors Wednesday about why he was still shorting the nutrition products company.

Herbalife had just reached a $200 million settlement with the Federal Trade Commission last week. This was probably very disappointing news for Ackman who wanted the FTC to shut the company down.

Herbalife shares gained 10% after the news and Ackman’s losses are now nearing $500 million. The stock initially surged as much as 22%. He is now blaming the company and Icahn for misleading investors on the nature of the FTC agreement so that the stock could rally.

His current allegations are based on a statement Icahn released following Herbalife’s FTC announcement. Icahn commented that the FTC “concluded that Herbalife is not a pyramid scheme.”

The FTC never did conclude whether Herbalife was or wasn’t a pyramid scheme. The FTC disputed this as “inaccurate.” Chairwoman Edith Ramirez said, “They were not determined not to be a pyramid.”

“You have the CEO of a public company and a controlling shareholder misleading the public and you can see the impact–the 22% rise in the stock price on the public being misled,” Ackman said on a conference call Wednesday. “They’re trying to manipulate the stock price higher.”

Herbalife responded to Ackman’s new allegations:

After more than two years of working with the FTC, I think we understand the terms of the settlement agreement very well. We would not have settled unless we had the greatest confidence in our ability to comply with the agreement and grow our business and we believe this will be proven out over time.

Disclaimer: We have no position in Herbalife Ltd. (NYSE: HLF) and have not been compensated for this article.