William Ackman, the founder of Pershing Square Capital Management hedge fund which has $12 billion under management, had engaged in a bruising battle against Herbalife for some years. During that period, he accused the company of being nothing more than a pyramid scheme and following the latest ruling by Federal Regulator,s in which the company has been ordered to pay $200 million in consumer relief settlement; his position has been vindicated after all these years. However, it must be said that it was nothing more than a moral victory since he had placed a bet of $1 billion in the actual demise of the company but the federal regulators did not actually take the ultimate step. On the other side was Carl C. Icahn, who had stated that the company would continue to exist and had invested likewise.
According to a report in the New York Times, ""On Friday, federal regulators imposed stiff sanctions on Herbalife for deceiving buyers and sellers of its products but stopped short of shutting down the company. Mr. Ackman had wagered big on Herbalife's demise, while Mr. Icahn had been betting on its ultimate survival. In a settlement with the Federal Trade Commission, Herbalife will pay $200 million in consumer relief, hire an outside monitor and make substantial changes to its business practices in the United States that could affect its bottom line, but the company will continue to operate. For nearly four years, Mr. Ackman argued loudly and often that Herbalife was a pyramid scheme that took advantage of customers - at one point staking $1 billion on a decline in Herbalife's shares in a characteristically brash move to prove his point. He gave numerous public presentations using hundreds of slides and videos to make his case that Herbalife was predatory. He even invoked members of Congress to pressure regulators to take action against the company."
The chairwoman of the FTC, Edith Ramirez said in a statement, "This settlement will require Herbalife to fundamentally restructure its business so that participants are rewarded for what they sell, not how many people they recruit,"
