Brian J. Herr, Republican candidate for United States Senate, today filed an ethics complaint against Senator Edward Markey over “the potential use of his federal office to manipulate the stock of a publicly traded company to benefit William Ackman, a hedge fund executive, speculator, and large political contributor”, says a release from Herr regarding Herbalife Ltd. (NYSE:HLF).
“This has all the elements to be the next House of Cards episode: a 38-year Washington politician, a billion dollar speculation by a hedge fund investor, and a lobbyist with ties to the Senator willing to make the introductions,” said Herr. “Sadly, these characters are not fictional. All you have to do is connect the dots to easily see that Senator Markey used his public office to manipulate the stock of a publicly traded company in order to financially benefit a campaign donor.”
Herr filed the complaint about Herbalife Ltd. (NYSE:HLF) with the Senate Select Committee on Ethics. In the letter addressed to Chairman Boxer and Vice Chairman Isakson, Herr outlines the facts of the case as uncovered by various news outlets and asks them “to conduct a formal investigation into the extent Mr. Markey misused his office.” A copy of the complaint about Herbalife Ltd. (NYSE:HLF) can be found below.
Herbalife Ltd. (NYSE:HLF) complaint
March 17, 2014
Honorable Barbara Boxer, Chairman
Honorable Johnny Isakson, Vice Chairman
Select Committee on Ethics
220 Hart Building
United States Senate
Washington, DC 20510
Dear Chairman Boxer and Vice Chairman Isakson:
It has come to my attention that Senator Edward Markey (D-MA) has potentially used his federal office to manipulate the stock of a publicly traded company to benefit William Ackman, a hedge fund executive, speculator, and large political contributor. According to reports in the Boston Globe, Wall Street Journal and New York Times, here are the facts:
- Hedge fund executive William Ackman made a $1 billion investment in the collapse of the nutritional supplement company Herbalife.
- William Ackman lobbied several lawmakers to take action against Herbalife in an effort to drive the stock price lower so that his $1 billion investment pays enormous returns.
- On January 23rd, Mr. Markey wrote a letter to federal regulators, requesting an investigation of the Herbalife. As a direct result, Herbalife’s stock dropped 14%. In the days leading up to January 23rd, various trade activity spiked on this stock.
- Other Senators declined to engage specifically saying they did not want to interfere in this type of stock transaction.
- William Ackman contributed $32,400 to Senate Democrats.
- William Ackman retained Rasky Baerlein, a communications and lobbying firm. The CEO and Chairman of the firm, Larry Rasky, is a former Markey staff member.
- On March 12, 2014, the Federal Trade Commission opened an official inquiry into Herablife, prompting a sell-off of the stock.
I believe that Mr. Markey has improperly used his public office and betrayed the public trust. Mr. Markey’s staff was well aware of Mr. Ackman’s intentions. Furthermore, the fact that Mr. Ackman retained Mr. Rasky raises suspicion and further calls into doubt that Mr. Markey was unaware of the impacts an investigation of Herbalife Ltd. (NYSE:HLF) would have on the stock price.
I believe that the public has a right to know what Mr. Markey knew about this situation and when he knew it. Moreover, the public has a right to know why Mr. Markey and his staff would even entertain using his office to interject their authority in an elaborate “short sell” stock transaction such as this. Finally, was the letter Mr. Markey sent to the FTC released in advance to those that could benefit by a “short sale” of Herbalife Ltd. (NYSE:HLF) stock?
I respectfully request that the Senate Select Committee on Ethics conduct a formal investigation into the extent Mr. Markey violated the public trust by misusing his office in this matter. A complete investigation of this matter should include a full analysis of all the transactions by the Securities Exchange Commission and other relevant federal regulatory and federal law enforcement agencies.
Thank you for your time and consideration of this matter.
Brian J. Herr
Candidate for United States Senate
H/T Svea Herbst-Bayliss