Hedge fund manager Bill Ackman, who has lodged an ongoing campaign deriding nutritional supplement purveyor Herbalife as a pyramid scheme, said federal investigators have questioned his PR firm, Global Strategy Group.
A day after the Wall Street Journal reported March 12 that the FBI is probing potential manipulation of Herbalife shares and interviewed "people hired by” Ackman, the activist investor called into CNBC's "Squawk Box" and said he has not been questioned about his campaign, but GSG staffers have been contacted.
"We've hired a political consultant, a firm called Global Strategy Group," he said. "They in turn hire subcontractors around the country and they assisted us with kind of government relations and lobbying and kind of advocating on behalf of my very firmly held view that Herbalife is a pyramid scheme. And my understanding is some of there, I think a handful of people that they’ve hired or that work for them have been interviewed by the FBI."
Ackaman, who has bet heavily on Herbalife’s decline through his Pershing Square Management, said he doesn’t know more than what was reported by the Journal and acknowledged he has been aware since last year that members of GSG received subpoenas from the Department of Justice and had given interviews.
GSG said in a statement that it is "our clear understanding" that the firm is not the target of the investigation. "We are confident that all our work surpasses the highest legal and ethical standards," the firm said, adding that it “has never made false statements about Herbalife, nor do we believe anyone else has either."
The Journal said the FBI and Manhattan US attorney’s office is looking into whether people made false statements about Herbalife’s business model to spur probes that would lower its stock price.
Herbalife, which has matched Ackman punch for punch in the ongoing PR battle, said the investor has a $1B bet against the company. "For more than two years, he has spent over $75 million orchestrating a false and fabricated attack against Herbalife, all in an effort to enrich himself," the company said in a statement. "We are confident in the strong fundamentals of our business model and have remained committed to helping people and communities improve their nutrition, while knowing that one day his tactics would be exposed."
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