Billionaire investor Bill Ackman's more than two-year campaign against Herbalife Ltd. hit a bump with his disclosure that federal investigators probing possible manipulation of the Los Angeles company's stock had subpoenaed a firm he had retained.
Ackman said Friday that Global Strategy Group, a Washington public relations firm working on the campaign against Herbalife, received the subpoena last summer and that a "handful" of its employees had been questioned by investigators from the office of U.S. Atty. Preet Bharara in Manhattan.
FOR THE RECORD
Herbalife probes: An article in the March 14 Business section about federal authorities questioning third parties about possible stock manipulation of Herbalife said the California attorney general's office was among the agencies with an open investigation. State prosecutors have confirmed only that they were meeting with Herbalife critics.
Ackman said in an interview on CNBC-TV that he hadn't been contacted and that neither he nor anyone connected to his short-selling campaign against the nutritional products maker had done anything wrong.
"Absolutely not," he said. "We have very carefully formed views.... Let me be clear, Herbalife is a pyramid scheme."
More than two years ago, Ackman, through his New York hedge fund, Pershing Square Capital Management, launched an attack on Herbalife with a public presentation on why he thinks the company operates as a pyramid scheme — and with a $1-billion short position, a stock bet that pays off if the price goes down.
"Since our initial presentation on Herbalife, Herbalife has been petitioning the government to investigate Pershing Square in connection with our short position in the company," Ackman said later Friday on his firm's website.
"We are not aware of any statements that we have made that are untrue, nor are we aware of any unlawful conduct on our part or by any consultants that we have hired," he said.
Global Strategy said in a statement that it was "not a target of any investigation."
"We are confident that all our work surpasses the highest legal and ethical standards," the company said. Global Strategy "has never made false statements about Herbalife, nor do we believe anyone else has either."
Herbalife fired back at Ackman, saying it knew that "one day his tactics would be exposed."
"Mr. Ackman has a $1-billion bet against Herbalife and a direct financial interest in hurting our company," said company spokesman Alan Hoffman. "For more than two years, he has spent over $75 million orchestrating a false and fabricated attack against Herbalife, all in an effort to enrich himself."
A spokesman for Bharara didn't return a telephone call. Investigators reportedly were looking into whether Global's employees made false statements in urging regulators to crack down on Herbalife, according to a story in the Wall Street Journal.
Herbalife stock plummeted after Ackman launched his attack publicly. In the four trading days after Ackman's announcement, the stock fell 43%, closing at a low of $26.06 on Christmas Eve 2012. The downswing led billionaire investor Carl Icahn, an Ackman critic, to start buying stock.
Shares rose steadily the next year and hit a high of $81.81 on Jan. 10, 2014. But they slipped last year and slumped to $29.70 on Jan. 20.
On Friday's news, Herbalife rose $2.71, or 8.2%, to $35.96.
The company still faces probes by the