Billionaire hedge fund manager Bill Ackman broadened his public assault Tuesday on diet shaker maker Herbalife, accusing it of defrauding members of its nutritional clubs.
Ackman, head of hedge fund Pershing Square Capital Management, disclosed details of his latest investigation into more than 240 Herbalife clubs during a webcast at the AXA Equitable Center in New York. He said that the company, in a "pyramid scheme", is targeting Latinos and other lower-income socioeconomic groups.
Herbalife's stock is up more than 6%, to $57.27, after the first hour of Ackman's presentation, which focused on how Herbalife is using its clubs to lure customers and acquire free labor.
"Herbalife has phantom or fictitious customers," Ackman said during the webcast, adding that many are uneducated trainees who are working without pay in the hopes of landing a job as a distributor at one of the clubs. "It's a tragedy. They don't realize they're being defrauded."