Federal authorities are probing people tied to investor Bill Ackman for potentially manipulating Herbalife stock, according to the Wall Street Journal. Fred Katayama reports.
TV AND WEB RESTRICTIONS~****~ A surprising twist in the battle over Herbalife. Federal authorities are reportedly probing people tied to the activist investor Bill Ackman. The Wall Street Journal says prosecutors and the FBI are investigating people he hired who lobbied against the nutritional supplements maker. They're looking into whether Ackman's allies made false statements about Herbalife to drive down its stock price and spur probes into the company. But what started all this was regulator's probes into Herbalife based on Ackman's charges that it was a Ponzi scheme. The Journal says neither Ackman nor his company, Pershing Square Capital Management, have been subpoenaed. A spokesman is quoted as saying, "We have been completely transparent about our position and our research, and we have acted lawfully in every respect." Former SEC enforcement lawyer Jacob Frenkel said, "The ability to link that all the way back to Mr. Ackman is most unlikely. The first question to ask is: was there any improper, illegal conduct at the point of contact level between his reps and the government?" Herbalife's stock spiked higher in early trading. The company, which has long denied Ackman's charges that it's a pyramid scheme, said it was confident about its business model. Ackman has placed a $1 billion bet that the company's stock would fall based on his accusations. But the stock has zigged and zagged instead as other activist investors like Carl Icahn and George Soros took on Ackman by buying shares.