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Interesting article...lots of up-votes, but few weighing in... I'll give it a go... Money is at stake for one side..a stock has been publicly shorted... Money

Interesting article...lots of up-votes, but few weighing in... I'll give it a go... Money is at stake for one side..a stock has been publicly shorted... Money, and a "way of life" created, for many, by an organizational structure (MLM), is at stake for Herbalife, to include it's financial managers, distributors and customers... I can only respond by sharing my own personal experiences with MLMs... I've never been approached by anyone that I suspected was knowingly, or unknowingly, involved in an MLM-type business that was selling a product I couldn't live without...and in many cases the "peddlers" had obviously been coached to tout benefits that I firmly believed didn't exist, or weren't possible... This to include lotions, juices, air purifiers, supplements, etc...you name it... In this specific case I can say the same...I try to go with the best available evidence whenever I can... I've never seen any evidence that a normal healthy person derives significant benefit from supplements of any kind...vitamins, herbs, juice extracts, whatever... I'm wary of "snake oil" to a fault...if you aren't well seek medical advice...buying something from a salesman is possibly one of the worst things you can do if you're concerned about your health...spend that money getting yourself checked out... The question for me is not whether Herbalife offers any kind of a health benefit to consumers, or an economic benefit to those involved in it's distribution network... The question to be answered is whether or not a "whistle-blower" should ethically be allowed to profit, substantially, from blowing that whistle...

dopamean 11y ago
> The question to be answered is whether or not a "whistle-blower" should ethically be allowed to profit, substantially, from blowing that whistle If they're an external party then I don't think it really matters.
- Outdoorsman 11y ago
  Your comment raises the question: if a substantial profit is involved is a claimant still "impartial", "neutral", "unbiased"...? Or, "external" to the proceedings, as your choice of terms suggests...? I don't have the answer....still thinking about this one! You make a good point...
  - ves 11y ago
    The hope is that a company's fate isn't decided by the claimant. Of course the claimant is biased, that's what would have motivated them to take this position in the first place. The ultimate decision should be reached by an unbiased third party or parties, in this case the FTC / the market.
- marincounty 11y ago
  I didn't know Bill Ackerman, or his fund, before this battle. While I agree with Ackerman completely, I think at this point, he should take his short position off the table. Bring down Herbalife down for moral reasons. We need morality. I didn't know Ackerman was only 49. I thought he was much older. I think Ackerman might have a political future, if he desires politics? Maybe, he just doesn't care about how that short looks. I thought it looked o.k., until today. I'm not a fan of financial activism. Positive, or negative activism. I am so tired of the poor/naieve being exploited. This financial activism is not going away; it's just getting started. (Suprised George Sorrows was in this mess. He one of the rich boys I actually like. He's be of the few rich boys who tells the truth. He once said, while being interviewed on his yacht, 'I owe all of my success to my father, and his fortune. I would be a nobody--if it wasen't for his money, and guidance.')
barney54 11y ago
Also be especially wary of people pushing products based on testimonials, not actual science.
logicallee 11y ago
I read through the slides back when this was presented. The issue that the guy (i.e. Bill Ackman) had is that the product is just a token, in his opinion: that nobody opens it, it sits unopened in apartments and houses: it's just a way to implement a pyramid scheme in the very literal sense of the word. This is how a pyramid scheme works: "you give me $5 and you get in on it and get all the materials. Everyone you recruit gives me $5, since I'm the one operating this thing, but look! You get $1 of it. So if you get a thousand people to give me $5 for the materials, you've just made $1000 without doing anything. But it gets better: for every person THEY recruit (second level) you get $0.25. That's the real way for you to get to get them to agree to pay me. That's the real selling point. So let's say you get a thousand people to buy my materials - okay, you've made $1,000 nice - but you also remember this pitch I just gave you, you tell it to them, and they also start to see your success and follow in your footsteps. So they also get a thousand people just like you did. And this time it's passive income. That's now a million people at the second level giving me $5, and I give you $0.25 out of all of them. That's $250,000 and you didn't have to do anything except sell $5,000 of product. Do you know a thousand people? Do you think you can talk to a thousand people in the next few months? Easy. But it gets better. I'll even give you $0.20 of the third level. So let's say each of those million people on average recruit a thousand people, now we've reached 1 billion people. At this point, you now have one billion * 0.20 is $200 million dollars. And literally all you need to do is buy $5 of product from me right now, I'll hook you up with all of the materials. Try it. This shit WORKS. I'm pulling $20,000 a month already, and I just started literally 7 weeks ago. IT REALLY REALLY WORKS. Investigate for yourself." And what do you do if you investigate for yourself? You DO find that it really does fucking work! That's the whole thing about pyramid schemes, they really and truly well and truly work all the way until the minute they don't. Because, you know, there's only 7 billion people on the planet. So that's what the charge is, that's what the slides are about: http://www.slideshare.net/talzanco/bill-ackmans-herbalife-presentation http://www.slideshare.net/talzanco/bill-ackmans-herbalife-pr... That's the charge. That you don't even need the boxes of supplement, they're just a cover for the fact that this is a pyramid scheme. Consider them tokens instead of boxes of unopened herbalife: I sell you a token, but what I'm really selling you is the story of how much money I'm making selling tokens. You buy some tokens from me, and start trying to also sell tokens to your friends. And so forth. The product is incidental. (According to the charge.) There's no reason the product can't work extremely well. In fact, personally I would say Herbalife has all the incentive and probably means to make it the best nutritional supplement on the planet. If you're selling overpriced tokens, why not make them high-quality? But the charge is that the fundamental business model is a pyramid scheme, instead of a product-selling scheme. That people aren't buying the product, they're buying the business opportunity. This is easy to see. Read my spiel above. It's unlikely you would consider buying any product from me based on this comment for $5. But I bet at least some readers were like, "hmmm, logicallee has a point - I wonder if I have a chance to strike it rich getting in on his program." Except there's no program, because I'm not a con artist :) I personally don't have a view about whether Herbalife fits this description, but that's what the accusation is. Your entire comment is more or less irrelevant.
CyrilBoh 11y ago
>The question to be answered is whether or not a "whistle-blower" should ethically be allowed to profit, substantially, from blowing that whistle... I guess a big part of the answer is who loses while he profits. At this point in time I'm not sure if the losers are wholly innocent.
analog31 11y ago
It seems to me that "activist shorting" for lack of a better term, is ethical if the activist is shorting based on public information. If so, then they are doing what any other investor could do. They could put themselves in an even better ethical position if they give the company a fair chance to correct the problem or to disclose it themselves. What is public information? In my view, the nature of a product being offered for sale is public information, even if you have to do some leg work to gain that information.

dopamean 11y ago

> The question to be answered is whether or not a "whistle-blower" should ethically be allowed to profit, substantially, from blowing that whistle If they're an external party then I don't think it really matters.

Outdoorsman 11y ago
Your comment raises the question: if a substantial profit is involved is a claimant still "impartial", "neutral", "unbiased"...? Or, "external" to the proceedings, as your choice of terms suggests...? I don't have the answer....still thinking about this one! You make a good point...
- ves 11y ago
  The hope is that a company's fate isn't decided by the claimant. Of course the claimant is biased, that's what would have motivated them to take this position in the first place. The ultimate decision should be reached by an unbiased third party or parties, in this case the FTC / the market.
marincounty 11y ago
I didn't know Bill Ackerman, or his fund, before this battle. While I agree with Ackerman completely, I think at this point, he should take his short position off the table. Bring down Herbalife down for moral reasons. We need morality. I didn't know Ackerman was only 49. I thought he was much older. I think Ackerman might have a political future, if he desires politics? Maybe, he just doesn't care about how that short looks. I thought it looked o.k., until today. I'm not a fan of financial activism. Positive, or negative activism. I am so tired of the poor/naieve being exploited. This financial activism is not going away; it's just getting started. (Suprised George Sorrows was in this mess. He one of the rich boys I actually like. He's be of the few rich boys who tells the truth. He once said, while being interviewed on his yacht, 'I owe all of my success to my father, and his fortune. I would be a nobody--if it wasen't for his money, and guidance.')

barney54 11y ago

Also be especially wary of people pushing products based on testimonials, not actual science.

logicallee 11y ago

I read through the slides back when this was presented. The issue that the guy (i.e. Bill Ackman) had is that the product is just a token, in his opinion: that nobody opens it, it sits unopened in apartments and houses: it's just a way to implement a pyramid scheme in the very literal sense of the word. This is how a pyramid scheme works: "you give me $5 and you get in on it and get all the materials. Everyone you recruit gives me $5, since I'm the one operating this thing, but look! You get $1 of it. So if you get a thousand people to give me $5 for the materials, you've just made $1000 without doing anything. But it gets better: for every person THEY recruit (second level) you get $0.25. That's the real way for you to get to get them to agree to pay me. That's the real selling point. So let's say you get a thousand people to buy my materials - okay, you've made $1,000 nice - but you also remember this pitch I just gave you, you tell it to them, and they also start to see your success and follow in your footsteps. So they also get a thousand people just like you did. And this time it's passive income. That's now a million people at the second level giving me $5, and I give you $0.25 out of all of them. That's $250,000 and you didn't have to do anything except sell $5,000 of product. Do you know a thousand people? Do you think you can talk to a thousand people in the next few months? Easy. But it gets better. I'll even give you $0.20 of the third level. So let's say each of those million people on average recruit a thousand people, now we've reached 1 billion people. At this point, you now have one billion * 0.20 is $200 million dollars. And literally all you need to do is buy $5 of product from me right now, I'll hook you up with all of the materials. Try it. This shit WORKS. I'm pulling $20,000 a month already, and I just started literally 7 weeks ago. IT REALLY REALLY WORKS. Investigate for yourself." And what do you do if you investigate for yourself? You DO find that it really does fucking work! That's the whole thing about pyramid schemes, they really and truly well and truly work all the way until the minute they don't. Because, you know, there's only 7 billion people on the planet. So that's what the charge is, that's what the slides are about: http://www.slideshare.net/talzanco/bill-ackmans-herbalife-presentation http://www.slideshare.net/talzanco/bill-ackmans-herbalife-pr... That's the charge. That you don't even need the boxes of supplement, they're just a cover for the fact that this is a pyramid scheme. Consider them tokens instead of boxes of unopened herbalife: I sell you a token, but what I'm really selling you is the story of how much money I'm making selling tokens. You buy some tokens from me, and start trying to also sell tokens to your friends. And so forth. The product is incidental. (According to the charge.) There's no reason the product can't work extremely well. In fact, personally I would say Herbalife has all the incentive and probably means to make it the best nutritional supplement on the planet. If you're selling overpriced tokens, why not make them high-quality? But the charge is that the fundamental business model is a pyramid scheme, instead of a product-selling scheme. That people aren't buying the product, they're buying the business opportunity. This is easy to see. Read my spiel above. It's unlikely you would consider buying any product from me based on this comment for $5. But I bet at least some readers were like, "hmmm, logicallee has a point - I wonder if I have a chance to strike it rich getting in on his program." Except there's no program, because I'm not a con artist :) I personally don't have a view about whether Herbalife fits this description, but that's what the accusation is. Your entire comment is more or less irrelevant.

CyrilBoh 11y ago

>The question to be answered is whether or not a "whistle-blower" should ethically be allowed to profit, substantially, from blowing that whistle... I guess a big part of the answer is who loses while he profits. At this point in time I'm not sure if the losers are wholly innocent.

analog31 11y ago

It seems to me that "activist shorting" for lack of a better term, is ethical if the activist is shorting based on public information. If so, then they are doing what any other investor could do. They could put themselves in an even better ethical position if they give the company a fair chance to correct the problem or to disclose it themselves. What is public information? In my view, the nature of a product being offered for sale is public information, even if you have to do some leg work to gain that information.