KPMG resigns as Herbalife auditor after insider trading (Financial Post) KPMG resigned as the auditor of Herbalife Ltd after one of its senior partners engaged in insider trading in Herbalife stock, the nutritional products company said on Tuesday. Herbalife said in a statement that KPMG’s resignation had nothing to do with its accounting practices or the integrity of its management — issues called into question by the high-stakes drama between hedge fund titans Bill Ackman and Carl Icahn over the company. KPMG said late on Monday it had resigned as the outside auditor of two of its clients because of the actions of a senior partner, who was in charge of the audit practice in its Los Angeles business unit.
Herbalife Gets New Ally as Stiritz Takes Stake Opposite Ackman (Businessweek) William Stiritz, chief executive officer of the company that makes Raisin Bran, has taken a 5.2 percent stake in Herbalife Ltd. (NYSE:HLF), giving the nutrition maker another ally as it fights accusations it’s a pyramid scheme. Stiritz, chairman and CEO of Post Holdings Inc (NYSE:POST), became the fourth largest Herbalife shareholder after the stock purchase, which he disclosed today in a regulatory filing. He joins hedge fund manager Carl Icahn, who earlier this year took up the fight against investor Bill Ackman, who has sold Herbalife shares short and said the company is an illegal pyramid scheme that should be shut down. The company has repeatedly denied the allegations.
Herbalife lower after WSJ article (Seeking Alpha) Shares of Herbalife Ltd. (NYSE:HLF) are under a bit of pressure today, falling as much as 6% before recovering. Possibly behind the move is a WSJ article published late Friday online and in the Saturday print edition. The piece profiles Professor William Keep, the dean of the College of New Jersey's business school and the author (with FTC Senior Economist Peter Vander Nat) of the article "Marketing Fraud: An Approach for Differentiating Multilevel Marketing from Pyramid Schemes", a quote from which appears on Bill Ackman's factsaboutherbalife website. Keep has been consulted by two dozen investment firms in the past several months including Pershing Square, WSJ says.
Amid Herbalife Debate, Prof. Keep Gets Some Hedge-Fund Pupils (Wall Street Journal) After years of lecturing in the classroom on the dangers of pyramid schemes, Prof. William Keep has a whole new set of pupils. Mr. Keep, a marketing professor and dean of the College of New Jersey's business school, has been consulted with in recent months by roughly two dozen investment firms, including Bill Ackman's Pershing Square Capital Management LP and George Soros's Soros Fund Management LLC. The funds, which together control tens of billions of dollars of investment cash, have sought to tap into his expertise in the arcane field of multilevel marketing, an understanding of which is crucial to parsing the debate over Herbalife Ltd. (NYSE:HLF)'s business model.
Direct selling gig should be taken on with caution (Regina Leader-Post) Multi-level marketing is a humming multi-billion-dollar engine of the Canadian economy that’s often overlooked, as business takes place in everyday conversations with friends and family, behind closed doors. But in recent months, an epic verbal battle between billionaire hedge-fund manager Bill Ackman and fellow corporate titan Carl Icahn over direct-selling company Herbalife Ltd. (NYSE:HLF), which sells health and nutrition products and supplements, has cast a spotlight on the global industry. Mr. Ackman has publicly, and repeatedly, called Herbalife a “fraud” and likened it to a Ponzi scheme, accusing the company of inflating prices and misleading consumers, and he has taken a massive $1-billion short position on the company to back it up.