Hedge fund manager Bill Ackman says Herbalife is a pyramid scheme that preys on the working poor. He has taken a $ 1 billion negative bet against the company.
Ackman argues that Herbalife’s business model is a pyramid scheme as defined by the Federal Trade Commission which states that participants make money primarily by recruiting others, rather than through the sale of goods and services.
The Wall Street Journal reported that the U.S. Securities and Exchange Commission’s enforcement division opened an investigation into Herbalife Ltd.
Following a number of investigations and a class action paid out in USA in 2004, the Commercial Court in Brussels, Belgium in Nov 2011 ruled that Herbalife was an illegal pyramid scheme. Is this not how all MLM companies operate?