Herbalife executives head to DC to explain business model

Thu Feb 20, 2014 5:22pm EST
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By Svea Herbst-Bayliss

BOSTON (Reuters) - Herbalife executives will meet with U.S. lawmakers' staffs in Washington on Friday to explain the business model of the nutrition company that has been fending off accusations by billionaire investor William Ackman that it is running a pyramid scheme.

Herbalife Chief Financial Officer John DeSimone and other company representatives will host a session where Congressional staff members can ask questions about how the company's direct selling business works, according to an invitation sent by the lobbying firm Raben Group and seen by Reuters.

An Herbalife spokesman confirmed the planned meeting and said: "We look forward to educating Congressional staffers about the important economic impact of the direct selling industry and our company, and answering their questions."

The meeting suggests that Herbalife is stepping up its lobbying efforts in Washington at the same time as Ackman is stepping up his campaign against the company.

For more than a year, Ackman has been betting that Herbalife's share price will collapse amid regulatory scrutiny, but so far his $1.16 billion short position has left him with paper losses as the stock price has climbed.

Ackman's rivals, including Carl Icahn, have lined up against his short bet by taking stakes in Herbalife.

Last month Senator Edward Markey, a Massachusetts Democrat, waded into the battle by requesting details from Herbalife about its business model, how members earn compensation, and whether it targets minorities as civil rights groups have alleged.

Boston City Councilor Tito Jackson and Massachusetts state Senator Sal DiDomenico have also called for an investigation into the company, as have lawmakers from California, New Mexico, Nevada and New York.   Continued...

A Herbalife logo is shown on a poster at a clinic in the Mission District in San Francisco, California April 29, 2013. REUTERS/Robert Galbraith