Will Ackman Get His FTC Bailout?

A blog about business and economics.
Feb. 4 2013 4:04 PM

Herbalife vs. FTC: Multilevel Marketing Company Says It's Not Under Investigation

76668947
Herbalife ads at an MLS match between CD Chivas USA and Los Angeles Galaxy in 2007

Photo by Stephen Dunn/Getty Images

Daniel Loeb and Bill Ackman have been at war over the future of Herbalife since December, with Ackman saying the company is a scam and Loeb saying it's totally sound. Ackman's most provocative claim, however, is that the company is actually an illegal pyramid scheme and is in fact likely to be deemed an illegal pyramid scheme by the Federal Trade Commission.

That set the stage for a dramatic stock market roller coaster today after the New York Post made a Freedom of Information Act request for FTC documents relating to Herbalife. The FTC responded to the Post by claiming an exemption related to ongoing criminal investigations, which naturally sent Herbalife shares plummeting. Then FTC spokesman Frank Dorman corrected the record and said the agency "withheld some information from documents posted online because it can’t disclose consumer complaints obtained from foreign sources if they request confidentiality." Herbalife is claiming victory, saying this shows there's no investigation, which of course isn't strictly true.

Advertisement

My assumption has been that Ackman doesn't have any literal reason to believe there is or will be any investigation, merely that a big, high-profile controversy about Herbalife will show that the business doesn't withstand scrutiny and crush it. But it's entirely possible that that's wrong, and his short play really is based on a belief that there's an investigation here.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.

TODAY IN SLATE

Foreigners

More Than Scottish Pride

Scotland’s referendum isn’t about nationalism. It’s about a system that failed, and a new generation looking to take a chance on itself. 

What Charles Barkley Gets Wrong About Corporal Punishment and Black Culture

Why Greenland’s “Dark Snow” Should Worry You

Three Talented Actresses in Three Terrible New Shows

The Human Need to Find Connections in Everything

It’s the source of creativity and delusions. It can harm us more than it helps us.

Jurisprudence

Happy Constitution Day!

Too bad it’s almost certainly unconstitutional.

Is It Worth Paying Full Price for the iPhone 6 to Keep Your Unlimited Data Plan? We Crunch the Numbers.

My Father Was James Brown. I Watched Him Beat My Mother. Then I Married Someone Like Him.

  News & Politics
Weigel
Sept. 17 2014 12:02 PM Here It Is: The Flimsiest Campaign Attack Ad of 2014, Which Won’t Stop Running
  Business
Moneybox
Sept. 17 2014 12:13 PM “For a While Liquidity Led to Stupidity”
  Life
The Eye
Sept. 17 2014 12:19 PM Early Cancer Hospitals Were Modeled on French Castles, Served Champagne
  Double X
The XX Factor
Sept. 15 2014 3:31 PM My Year As an Abortion Doula
  Slate Plus
Slate Fare
Sept. 17 2014 9:37 AM Is Slate Too Liberal?  A members-only open thread.
  Arts
Behold
Sept. 17 2014 11:06 AM Inside the Exclusive World of Members-Only Clubs
  Technology
Future Tense
Sept. 17 2014 11:14 AM How Does That Geometry Problem Make You Feel? Computer tutors that can read students’ emotions.
  Health & Science
Bad Astronomy
Sept. 17 2014 11:18 AM A Bridge Across the Sky
  Sports
Sports Nut
Sept. 15 2014 9:05 PM Giving Up on Goodell How the NFL lost the trust of its most loyal reporters.