Markey Calls For Herbalife “Pyramid Scheme” Investigation
This article was originally published in The Tan Sheet
The Massachusetts Democrat Jan. 22 asked Herbalife for information about its compensation system and sales to non-distributors, and urged the Securities and Exchange Commission and Federal Trade Commission to investigate the company’s marketing practices.
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The multilevel marketer of weight-management shakes and other nutritionals says its independent distributor network, far from being a pyramid scheme, in fact is essential in helping people lose weight and adopt healthy lifestyles, according to Herbalife executives.
Herbalife executives dispute allegations by activist investor William Ackman, who is short-selling the firm’s stock. Another investor, Third Point, comes to Herbalife’s defense with the acquisition of an 8.24% stake.
Industry also seems supportive of the idea, while Pew touts the power of the power of track-and-trace as a deterrent.