Herbalife is a company that sells weight loss shakes, vitamins and other similar products worth billions of dollars. The company has been around for more than 30 years. It is traded on the New York Stock Exchange. So what could be more legitimate? Bill Ackman, who manages a hedge fund thinks the whole thing is a pyramid scheme and has shorted more than a billion dollars’ worth of Herbalife stock. This means that if the stock falls as Ackman thinks it will, the fund will make money.
1. Based on the article, what is the ironic thing that has happened with Herbalife stock?
2. What is the structure that Herbalife uses and when could this be indicative of a fraudulent scheme?
3. What did the CEO of Herbalife accuse Mr. Ackman of?
4. Since this story aired, what has happened to Herbalife’s stock and what is your opinion of the company as an investment?
Goldstein, J. (2013). Is Herbalife A Pyramid Scheme? NPR.org:Planet Money (Retrievable online at http://www.npr.org/blogs/money/2013/01/16/169468312/the-fight-over-herbalife)
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