Pomerantz Law Firm Announces the Filing of a Class Action Against Herbalife Ltd. and Certain Officers -- HLF
April 14 2014 - 4:06PM
Pomerantz LLP announces the filing of a class action lawsuit
against Herbalife Ltd. ("Herbalife" or the "Company") (NYSE:HLF)
and certain of its officers. The class action, filed in United
States District Court, Central District of California and docketed
under 2:14-cv-02850, is on behalf of a class consisting of all
persons or entities who purchased or otherwise acquired securities
of Herbalife between May 4, 2010 and April 11, 2014 both dates
inclusive (the "Class Period"). This class action seeks to recover
damages against the Company and certain of its officers and
directors as a result of alleged violations of the federal
securities laws pursuant to Sections 10(b) and 20(a) of the
Securities Exchange Act of 1934 and Rule 10b-5 promulgated
thereunder.
If you are a shareholder who purchased Herbalife securities
during the Class Period, you have until June 13, 2014, to ask the
Court to appoint you as Lead Plaintiff for the class. A copy of the
Complaint can be obtained at www.pomerantzlaw.com. To discuss this
action, contact Robert S. Willoughby at rswilloughby@pomlaw.com or
888.476.6529 (or 888.4-POMLAW), toll free, x237. Those who inquire
by e-mail are encouraged to include their mailing address,
telephone number, and number of shares purchased.
Herbalife is a network marketing company that sells weight
management, nutritional supplement and personal care products. The
Company sells its products globally through a network of
independent distributors, which are typically individuals with
little marketing expertise that were induced by the Company to
purchase the Company's products in the hope that they would be able
to resell the product to other consumers or distributors. Herbalife
also sells literature and promotional materials to these
distributors.
The Complaint alleges that throughout the Class Period,
Defendants made materially false and misleading statements
regarding the Company's business, operational and compliance
policies. Specifically, Defendants made false and/or misleading
statements and/or failed to disclose that: (i) the Company's
operations were based on a pyramid scheme whereby its distributors
generate revenue by recruiting other distributors rather than
selling Herbalife's diet and nutritional products to the general
public; (ii) the Company engaged in deceptive trade practices where
it unduly pressured its members to purchase more products to resell
as one of its "distributors"; and (iii) as a result of the above,
the Company's financial statements were materially false and
misleading at all relevant times.
On December 19, 2012, CNBC reported that Bill Ackman ("Ackman"),
Founder and Chief Executive Officer of Pershing Square Capital
Management, L.P. ("Pershing") considers Herbalife to be a pyramid
scheme after spending a year researching the Company's
fundamentals. On this news, Herbalife stock declined $5.16 per
share, or over 12%, to close at $37.34 per share on December 19,
2012.
On December 20, 2012, Ackman conducted a presentation concerning
Herbalife at the Sohn Investment Conference where he affirmed his
conclusion that Herbalife is a pyramid scheme as its distributors
make more money by recruiting other distributors than selling the
Company's products to the general public. Specifically,
Ackman alleged that since the founding of the Company,
approximately 1.9 million distributors have failed to make any
money from selling Herbalife products, costing them a net loss of
$3.8 billion. On this news, Herbalife stock declined an
additional $10.07 per share, or over 27%, over the next two trading
sessions, to close at $27.27 per share on December 21, 2012.
On January 9, 2013, the New York Times reported that the
Securities and Exchange Commission had opened an investigation into
the Company.
On January 23, 2014, U.S. Senator Edward J. Markey of
Massachusetts sent letters to federal regulators, including the SEC
and the FTC, urging them to investigate Herbalife. Mr. Markey also
sent a letter to Herbalife's CEO, Michael O. Johnson, asking
several questions about the company's business, including pointed
requests that reflected the concerns raised by Ackman in
December 2012. Some of the questions asked in the letter to
Herbalife include: (1) "How much profit (net earnings after
expenses) can the average distributor expect to make from retailing
to non-distributors (i.e., people who are not directly involved in
Herbalife themselves)?"; and (2) "What's the correct number of
sales outside the network as a percentage of total sales" for each
of the last five years and information on these sales measured by
product, quantity and dollars.
Senator Markey urged both the FTC and SEC to examine whether
Herbalife was a legitimate multilevel marketing Company, whose
revenues are ultimately generated by sales to the general public;
or whether Herbalife was a pyramid scheme, whose revenues were
dependent on continuous recruitment of other distributors, which
were ultimately left sustaining substantial losses on their
purchases of the Company's weight loss products. To highlight
evidence that Herbalife may indeed operate as a pyramid scheme,
Senator Markey pointed to instances where residents of
Massachusetts suffered crushing financial setbacks as a result of
the Company's marketing practices. On this news, Herbalife
stock declined $7.61 per share, or over 10%, to close at $65.92 per
share on January 23, 2014.
On April 11, 2014, the Financial Times reported that the United
States Department of Justice and Federal Bureau of Investigation
had opened a criminal probe of Herbalife. On this news,
shares of Herbalife spiraled downward from $59.84 to $51.48, more
than 13%.
The Pomerantz Firm, with offices in New York, Chicago, Florida,
and San Diego, is acknowledged as one of the premier firms in the
areas of corporate, securities, and antitrust class litigation.
Founded by the late Abraham L. Pomerantz, known as the dean of the
class action bar, the Pomerantz Firm pioneered the field of
securities class actions. Today, more than 70 years later, the
Pomerantz Firm continues in the tradition he established, fighting
for the rights of the victims of securities fraud, breaches of
fiduciary duty, and corporate misconduct. The Firm has recovered
numerous multimillion-dollar damages awards on behalf of class
members.
CONTACT: Robert S. Willoughby
Pomerantz LLP
rswilloughby@pomlaw.com
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