Activist investor Bill Ackman is bracing for possible litigation from Herbalife Ltd. (NYSE:HLF), the nutrition company that he has labeled a 'pyramid scheme' with a stock price that should fall to 'zero', according to FOX Business Network (FBN)'s Charlie Gasparino. Gasparino says "Ackman’s attorneys believe the possible lawsuit could be filed at or before Herbalife is scheduled to hold its much-anticipated investor day in New York on Thursday.
According to Gasparino, the lawsuit against Ackman may allege “tortuous interference,” meaning that the hedge fund investor intentionally damaged the reputation of the company. Today, a large Herbalife distributor announced he was leaving and urged others to follow. Although no timings have been announced, Herbalife tells FBN that it is weighing a lawsuit.
On the other side, Ackman has been calling on the FTC to shut down Herbalife, which he has called an illegal pyramid scheme. Ackman declined to comment on the potential lawsuit.