Free Republic
Browse · Search
News/Activism
Topics · Post Article

Skip to comments.

Is this George Soros and Carl Icahn-backed firm running a "pyramid scheme"?
London loves business ^ | 3/13/14 | Sophie Hobson

Posted on 03/13/2014 1:59:34 PM PDT by mgist

Is this George Soros and Carl Icahn-backed firm running a "pyramid scheme"? 13 March 2014 | By Sophie Hobson

George Soros and Carl Icahn both hold stakes in it, but controversial US firm Herbalife has come under consistent fire from rival investor William Ackman over its allegedly dubious operations.

Now it’s being investigated by the US Federal Trade Commission (FTC) over claims it might be running a “pyramid scheme”.

The key accusation against Herbalife, which makes weight loss and nutritional supplements and is listed on the New York Stock Exchange, is that it makes most of its money from signing up new distributors rather than from sales.

Herbalife’s shares dropped by as much as 17% following the news.

>> Six of the worst Ponzi schemes in history

Herbalife itself said the following in a statement: “Herbalife welcomes the inquiry given the tremendous amount of misinformation in the marketplace, and will cooperate fully with the FTC.

“We are confident that Herbalife is in compliance with all applicable laws and regulations.”

So what’s going on?

Activist investor Ackman has taken a $1bn position against Herbalife, and long called it a “pyramid scheme”.

This week his hedge fund Pershing Square Capital Management made further allegations that Herbalife was violating direct sales regulations in China.

But up until this week’s news, Herbalife stock has been performing quite nicely.

Soros may have reduces his stake in the company last year, but he didn’t pull out: he still holds stock through his firm Soros Fund Management.

>> George Soros makes $5.5bn as fund becomes world #1 again

Icahn still owns nearly 17%, according to the BBC, and been going head-to-head with Ackman over his allegations.

We’ll have to wait and see what the FTC’s final ruling is, but this case is definitely one to watch.


TOPICS: News/Current Events
KEYWORDS: aoros; herbalife; icahncarlicahn; pyramidscheme; soros

1 posted on 03/13/2014 1:59:34 PM PDT by mgist
[ Post Reply | Private Reply | View Replies]

To: mgist
Is this a trick question?
2 posted on 03/13/2014 2:00:07 PM PDT by E. Pluribus Unum (If Barack Hussein Obama entertains a thought that he does not verbalize, is it still a lie?)
[ Post Reply | Private Reply | To 1 | View Replies]

To: mgist

Anything Soros is involved with is a scheme.


3 posted on 03/13/2014 2:03:13 PM PDT by Count of Monte Fisto (The foundation of modern society is the denial of reality.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: mgist

My bet is FTC does absolutely nothing. Im glad Soros is getting a taste of his own medicine.


4 posted on 03/13/2014 2:03:14 PM PDT by mgist (.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: mgist

It’s fun to watch hedge fund titans square off.

I remember back in the early 70s when Amway was making some folks some pretty good money in Michigan. There was a competitor that sprung up called Bestline Products.

My buddy jumped on it with dreams of wealth and wound up with a garage full of laundry soap he couldn’t sell.


5 posted on 03/13/2014 2:05:28 PM PDT by nascarnation (I'm hiring Jack Palladino to investigate Baraq's golf scores.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: nascarnation

Agreed


6 posted on 03/13/2014 2:10:30 PM PDT by mgist (.)
[ Post Reply | Private Reply | To 5 | View Replies]

To: mgist; Vendome

This is just another go at the network marketing industry, from a guy who has a lot riding on destroying it. Why is that even legal?


7 posted on 03/13/2014 3:26:15 PM PDT by 2ndDivisionVet (I will raise $2M for Sarah Palin's next run, what will you do?)
[ Post Reply | Private Reply | To 1 | View Replies]

To: mgist

The answer is no. It’s multi-level marketing, but not a pyramid scheme or a scam.

The people pushing this are short sellers.


8 posted on 03/13/2014 3:26:19 PM PDT by Monmouth78
[ Post Reply | Private Reply | To 1 | View Replies]

To: mgist
The key accusation against Herbalife, which makes weight loss and nutritional supplements and is listed on the New York Stock Exchange, is that it makes most of its money from signing up new distributors rather than from sales.

Costco readily admits it makes 95% of its profit from the sale of memberships, not from the sale of products.

9 posted on 03/13/2014 3:29:47 PM PDT by Sgt_Schultze (A half-truth is a complete lie)
[ Post Reply | Private Reply | To 1 | View Replies]

To: mgist

You mean like Amway, Tupperware, Avon


10 posted on 03/13/2014 5:51:15 PM PDT by Mastador1 (I'll take a bad dog over a good politician any day!)
[ Post Reply | Private Reply | To 1 | View Replies]

To: 2ndDivisionVet

Well one wonders.

Truth is, if the money is made off initiates, then it’s a pyramid while

If the money is made from selling actual products then it qualifies as simply distributorship or master agent/sub agent.

Much like my businesses


11 posted on 03/13/2014 6:06:13 PM PDT by Vendome (Don't take life so seriously-you won't live through it anyway-Enjoy Yourself ala Louis Prima)
[ Post Reply | Private Reply | To 7 | View Replies]

To: Vendome

Didn’t AMWAY win such a case in 1978?


12 posted on 03/13/2014 6:43:19 PM PDT by 2ndDivisionVet (I will raise $2M for Sarah Palin's next run, what will you do?)
[ Post Reply | Private Reply | To 11 | View Replies]

To: 2ndDivisionVet

They did...


13 posted on 03/13/2014 7:23:44 PM PDT by Vendome (Don't take life so seriously-you won't live through it anyway-Enjoy Yourself ala Louis Prima)
[ Post Reply | Private Reply | To 12 | View Replies]

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.

Free Republic
Browse · Search
News/Activism
Topics · Post Article

FreeRepublic, LLC, PO BOX 9771, FRESNO, CA 93794
FreeRepublic.com is powered by software copyright 2000-2008 John Robinson