In the 13D filed with SEC on Feb 14, Carl Icahn made a couple of harmless remarks about Herbalife Ltd. (NYSE:HLF) including, The Reporting Persons intend to have discussions with management of the Issuer regarding the business and strategic alternatives to enhance shareholder value, such as a recapitalization or a going-private transaction. New information reported by CNBC’s Jane Well says that KPMG’s partner said in an email to his friend that, ” Herbalife was going private”.
Now this implies, as correctly pointed out by Tyler Durden at ZeroHedge , that Carl Icahn was not just changing Herbalife’s board, but also making some efforts to take the company off the public eye. Was he really? or did such an email actually exist are questions that can only be confirmed through SEC and FBI’s investigation. For now it could just be a rumor.
KPMG’s ex-partner, Scott London, has become notoriously famous overnight, thanks to allegations that he was the one who provided inside information on several companies to his golf buddy, Bryan Shaw. We could not confirm the email that CNBC cited between Shaw and London. However, the criminal complaint filed by FBI agent against Shaw and London talks about a phone call between both parties, in which Shaw and London discussed the prospects of Herbalife Ltd. (NYSE:HLF) going private. In the conversation London only says that in the event that Herbalife goes private he would let Shaw know in advance so that they can make some money. They also discuss how Bill Ackman’s involvement has bogged down Herbalife’s performance and how Carl Icahn’s involvement is good for the stock.
Shaw was approached by FBI who then betrayed London and recorded their conversations in which insider trading tips were discussed. Shaw traded heavily in Herbalife Ltd. (NYSE:HLF) shares before earnings announcements. The first illegal tip on Herbalife was exchanged in early 2011. London also provided Shaw with an early preview to Herbalife’s Q4 earning guidance and then later to the real earnings for Q4 2012.
London said to WSJ that he was initially unaware that Shaw was trading on this information. However, Shaw said that London was fully aware that he was trading securities based on this information . Both parties are cooperating with FBI investigation. Shaw allegedly netted $1 million in profits from these trades that involved not only Herbalife Ltd. (NYSE:HLF) but also Deckers Outdoor Corp (NASDAQ:DECK), Skechers USA Inc (NYSE:SKX) and possibly shares of other companies. The illegal trading tips began in 2010 and continued through March 2013, . London was compensated for his inside information by Shaw in the form of cash, jewelry and other goods.
The million dollar question is was/is Herbalife Ltd. (NYSE:HLF) planning to go private?