Hedge fund manager Bill Ackman discusses Herbalife

Bill Ackman, founder of Pershing Square Capital Management, discusses Herbalife in a presentation in New York on Thursday. (Scott Eells / Bloomberg / December 20, 2012)

  • Also
  • Top 10 richest people ever led by 14th century African king Photos: Top 10 richest people ever led by 14th century African king
  • Wall Street rogues: Infamous corporate villains Photos: Wall Street rogues: Infamous corporate villains

With its three-day stock plunge accelerating Friday, Herbalife Ltd. said it will defend itself against a hedge fund manager’s accusations that the business is a “pyramid scheme” – but the company said its response won't come until next month.

The Los Angeles maker of nutritional products said Friday that it will wait until the week of Jan. 7 to host an event for analysts at which it will respond to the “distorted, outdated and inaccurate information” alleged by moneyman Bill Ackman.

Ackman, who founded Pershing Square Capital Management, says Herbalife rewards its sales representatives more for recruiting distributors than for selling products. The compensation structure, he says, leaves millions of small-scale sellers making next to nothing while an elite few rake in huge paydays.

Ackman called Herbalife “the best-managed pyramid scheme in the history of the world” – allegations he spelled out in a multimedia presentation delivered Thursday to a full house in New York and streamed live online.

Herbalife's stock price has plummeted since Ackman indicated Wednesday that he is “shorting” the stock. In a short sale, an investor borrows stock and immediately sells it, intending to eventually return the shares to the original owner after buying them back at a lower price.

The company's shares were trading late in trading day Friday at about $27 a share, down 36% from their closing price Tuesday.

ALSO:

U.S. says UBS was motivated by 'sheer greed' in Libor rigging