Ackman has called on regulators to investigate Herbalife's
distribution model which he calls a "pyramid scheme," where a
company makes most of its money by recruiting distributors rather
than selling products to real customers.
Herbalife has vehemently denied operating a pyramid scheme. Ackman's
"accusations are provably false," Chief Financial Officer John
DeSimone said in a New York Times article on Monday.
Pershing Square responded to the article by saying Herbalife failed
to address a number of questions, including those about its sales
practices and distributor remuneration.
"Herbalife has failed to respond to basic questions that we and
others have continued to raise," the fund said in a statement.
The firm said it would release a presentation on Tuesday
highlighting the company's violations of laws in China.
Billionaire investor Ackman has taken a $1 billion short position
against Herbalife, betting that the company's share price will
eventually fall to zero.
[to top of second column]
Ackman's latest volley comes nearly two months after China's
regulators launched probes into the Chinese operations of U.S. based
skincare products maker Nu Skin Enterprises Inc <NUS.N>, which
operates a business model similar.
Herbalife raised its current-quarter forecast last month after
sales in China jumped more than 120 percent in the fourth quarter of
Herbalife's shares closed up 2.2 percent at $66.16 on the New York
Stock Exchange on Monday.
(Reporting by Siddharth Cavale in
Bangalore; editing by Joyjeet Das)
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