Global Nutrition Company Herbalife Counseled by BSF on Libelous Accusations
Herbalife has engaged Boies, Schiller & Flexner in one of the most closely watched disputes in the financial world this year. BSF represents Herbalife, Ltd., a leading global nutrition company, publicly traded on the New York Stock Exchange. Herbalife is a member of the Direct Selling Association, a group of companies that sell products directly to consumers through independent distributors.
On December 20, 2012, Herbalife was the subject of a three-hour presentation by Bill Ackman, of Pershing Square Capital, a multi-billion dollar hedge fund. In the presentation, Ackman falsely accused Herbalife of being a pyramid scheme because Herbalife markets its products through direct sales and because it compensates its sales personnel (which Herbalife calls “distributors”) in part by paying them a percentage of the sales made by distributors they have previously recruited to sell Herbalife products. In leveling his accusations, Ackman admitted to the market that Pershing was a “short seller” of Herbalife stock. As a short seller, Ackman andPershing Squarebenefit as the Herbalife share price drops.
Herbalife denies Ackman’s allegations and has hired the Firm to advise on a variety of issues related to Ackman’s statements. Herbalife has repeatedly stated and demonstrated that it sells product not only to consumers unaffiliated with Herbalife, but also to its own distributors who themselves consume Herbalife products. It has reminded the market that it is a 32 year old, publicly traded company subject to a variety of regulation and oversight.
The engagement is led by Managing Partner Jonathan Schiller, assisted by partners Bill Ohlemeyer, Jonathan Sherman and Courtney Rockett. Other partners working on the matter are Andrew Michaelson, David Zifkin, Richard Weill and Jeremy Vest. Counsel Laurie Josephs and Patrick Rohan are also on the team, as are associates Kroetsch, Daniel Bryan, Jenny Vatrenko, Moshe Schwartz, Jon-Michael Dougherty, and Wells Harrell.