NEW YORK (AP) — Hedge fund manager Bill Ackman said he will hold a presentation Tuesday that will prove nutrition company Herbalife is a “fraud.”
The announcement sent shares of Herbalife down more than 11 percent in trading Monday.
Ackman, the head of Pershing Square Capital Management, has been battling Herbalife since 2012, saying that the company is a “pyramid scheme.” He alleges that the direct seller makes most of its money from recruiting new salespeople rather than selling its supplements and weight-loss products.
Herbalife has denied the charges.
Ackman holds a “short” position in Herbalife, which means that he is betting the company’s stock will drop. If it does, he will profit from it.
Ackman said he has hours of recorded video and audio that will prove his allegations. He also said he has internal documents given to him by employees.
“You’re going to learn why Herbalife is going to collapse,” Ackman said in a TV interview with business news network CNBC Monday.
In a statement Monday, Herbalife said its business has a positive impact, helping people earn extra money and encouraging others to get healthier. It said all its sellers receive extensive corporate training and are monitored by the company.
Herbalife uses a network of distributors to sell its nutritional supplements and weight-loss products.
Ackman said the presentation will take place in New York Tuesday morning and can be seen online at herbalifepyramidscheme.com.
Shares of Herbalife Inc. fell $6.82, or 11.2 percent, to close at $54.02 Tuesday. Shares are down about 31 percent in the year to date.