NEW YORK, May 9, 2014 /PRNewswire/ -- Pomerantz LLP
announces the filing of a class action lawsuit against Herbalife
Ltd. ("Herbalife" or the "Company") (NYSE: HLF) and certain of its
officers. The class action, filed in United States District
Court, Central District of California and docketed under 2:14-cv-02850,
is on behalf of a class consisting of all persons or entities who
purchased or otherwise acquired securities of Herbalife between
May 4, 2010 and April 11, 2014 both dates inclusive (the "Class
Period"). This class action seeks to recover damages against the
Company and certain of its officers and directors as a result of
alleged violations of the federal securities laws pursuant to
Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and
Rule 10b-5 promulgated thereunder.
If you are a shareholder who purchased Herbalife securities
during the Class Period, you have until June
13, 2014, to ask the Court to appoint you as Lead Plaintiff
for the class. A copy of the Complaint can be obtained at
www.pomerantzlaw.com. To discuss this action, contact
Robert S. Willoughby at
rswilloughby@pomlaw.com or 888.476.6529 (or 888.4-POMLAW), toll
free, x237. Those who inquire by e-mail are encouraged to include
their mailing address, telephone number, and number of shares
purchased.
Herbalife is a network marketing company that sells weight
management, nutritional supplement and personal care
products. The Company sells its products globally through a
network of independent distributors, which are typically
individuals with little marketing expertise that were induced by
the Company to purchase the Company's products in the hope that
they would be able to resell the product to other consumers or
distributors. Herbalife also sells literature and promotional
materials to these distributors.
The Complaint alleges that throughout the Class Period,
Defendants made materially false and misleading statements
regarding the Company's business, operational and compliance
policies. Specifically, Defendants made false and/or misleading
statements and/or failed to disclose that: (i) the Company's
operations were based on a pyramid scheme whereby its distributors
generate revenue by recruiting other distributors rather than
selling Herbalife's diet and nutritional products to the general
public; (ii) the Company engaged in deceptive trade practices where
it unduly pressured its members to purchase more products to resell
as one of its "distributors"; and (iii) as a result of the above,
the Company's financial statements were materially false and
misleading at all relevant times.
On December 19, 2012, CNBC
reported that Bill Ackman
("Ackman"), Founder and Chief Executive Officer of Pershing Square
Capital Management, L.P. ("Pershing") considers Herbalife to be a
pyramid scheme after spending a year researching the Company's
fundamentals. On this news, Herbalife stock declined
$5.16 per share, or over 12%, to
close at $37.34 per share on
December 19, 2012.
On December 20, 2012, Ackman
conducted a presentation concerning Herbalife at the Sohn
Investment Conference where he affirmed his conclusion that
Herbalife is a pyramid scheme as its distributors make more money
by recruiting other distributors than selling the Company's
products to the general public. Specifically, Ackman alleged
that since the founding of the Company, approximately 1.9 million
distributors have failed to make any money from selling Herbalife
products, costing them a net loss of $3.8
billion. On this news, Herbalife stock declined an
additional $10.07 per share, or over
27%, over the next two trading sessions, to close at $27.27 per share on December 21, 2012.
On January 9, 2013, the
New York Times reported that the
Securities and Exchange Commission had opened an investigation into
the Company.
On January 23, 2014, U.S. Senator
Edward J. Markey of Massachusetts sent letters to federal
regulators, including the SEC and the FTC, urging them to
investigate Herbalife. Mr. Markey also sent a letter to Herbalife's
CEO, Michael O. Johnson, asking
several questions about the company's business, including pointed
requests that reflected the concerns raised by Ackman in
December 2012. Some of the questions
asked in the letter to Herbalife include: (1) "How much profit (net
earnings after expenses) can the average distributor expect to make
from retailing to non-distributors (i.e., people who are not
directly involved in Herbalife themselves)?"; and (2) "What's the
correct number of sales outside the network as a percentage of
total sales" for each of the last five years and information on
these sales measured by product, quantity and dollars.
Senator Markey urged both the FTC and SEC to examine whether
Herbalife was a legitimate multilevel marketing Company, whose
revenues are ultimately generated by sales to the general public;
or whether Herbalife was a pyramid scheme, whose revenues were
dependent on continuous recruitment of other distributors, which
were ultimately left sustaining substantial losses on their
purchases of the Company's weight loss products. To highlight
evidence that Herbalife may indeed operate as a pyramid scheme,
Senator Markey pointed to instances where residents of Massachusetts suffered crushing financial
setbacks as a result of the Company's marketing
practices. On this news, Herbalife stock declined
$7.61 per share, or over 10%, to
close at $65.92 per share on
January 23, 2014.
On April 11, 2014, the
Financial Times reported that the United States Department
of Justice and Federal Bureau of Investigation had opened a
criminal probe of Herbalife. On this news, shares of
Herbalife spiraled downward from $59.84 to
$51.48, more than 13%.
The Pomerantz Firm, with offices in New York, Chicago, Florida, and San
Diego, is acknowledged as one of the premier firms in the
areas of corporate, securities, and antitrust class litigation.
Founded by the late Abraham L.
Pomerantz, known as the dean of the class action bar, the
Pomerantz Firm pioneered the field of securities class actions.
Today, more than 70 years later, the Pomerantz Firm continues in
the tradition he established, fighting for the rights of the
victims of securities fraud, breaches of fiduciary duty, and
corporate misconduct. The Firm has recovered numerous
multimillion-dollar damages awards on behalf of class members.
CONTACT:
Robert S.
Willoughby
Pomerantz LLP
rswilloughby@pomlaw.com
SOURCE Pomerantz LLP