Shares in Herbalife fell by more than 2 percent Tuesday as hedge fund manager Bill Ackman accused the company, which sells vitamins, shakes and other supplements, of “operating illegally” in China.
Speaking during a conference call that lasted more than two hours, Ackman, the billionaire founder of the firm Pershing Square Capital Management, called the company’s accounting of its Chinese business “highly misleading.”
Pointing to internal documents obtained from a former employee at Herbalife, Ackman argued that Herbalife’s Chinese operations were identical to its business in other countries such as the United States and Mexico. That would be problematic because Chinese laws prohibit any multilevel marketing and direct marketing, Ackman said.
Herbalife’s shares recovered slightly after the presentation but closed down 1.1 percent for the day at $65.39.