Please see the attached class action complaint filed yesterday in Florida. Bears opine, that one main difference between this class action and the Bostick class action— and even the FTC complaint — is that several individual, high-level Herbalife distributors are named as defendants. Those people are going to have to retain counsel and figure out how much they want to fight. Some may be tempted to enter into early settlements where they might agree to provide plaintiffs with documents and information that can be used against the company.

However, bulls will argue that HLF stock was about flat today which shows investors are not worried about this case so only time will tell.

Get Our Activist Investing Case Study!

Get the entire 10-part series on our in-depth study on activist investing in PDF. Save it to your desktop, read it on your tablet, or print it out to read anywhere! Sign up below!

Herbalife will either distance itself from those distributors or take over their defense. So they’ll either be condemning their conduct or endorsing it. Other high level distributors will have to worry about whether they will be added to the lawsuit.

The other big difference between this and Bostick is the new complaint alleges a RICO conspiracy – a corrupt enterprise consisting of the company and many top distributors – and it alleges that their sales-event methods violate the FTC order as well as other fraud statutes.

 

Rodgers v Herbalife

Bill Ackman valeant VRX herbalife HLF activism shortselling MLMs VALUEWALK Pershing Square Capital investors activist investing William Ackman