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Herbalife Maintains Rally, With Third Gain in Past Four Days

By Steve Wynne-Jones
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Herbalife Maintains Rally, With Third Gain in Past Four Days

Herbalife shares surged for the third time in the past four trading days as the nutrition company tries to battle back from a regulatory probe in the US and accusations by billionaire Bill Ackman.

The stock climbed 6.9 per cent to $44.99 on Monday in New York. Shares of the Los Angeles-based company are up 19 per cent this year, lifted by an 11 per cent gain on Friday and a 13 per cent increase on Wednesday.

Herbalife had tumbled last year, dragged down by attacks from Ackman, who has accused the company of being a pyramid scheme. The criticism prompted a probe by the Federal Trade Commission and pressured Herbalife into adjusting its business model, hampering sales growth.

The stock began rebounding last week after Herbalife won dismissal of a lawsuit by investors saying they lost money after the pyramid-scheme claims came to light. A judge ruled that Ackman’s allegations didn’t constitute evidence that Herbalife committed fraud, so the investors couldn’t show that losses they suffered were caused by misrepresentations.

While the ruling marks a victory for Herbalife, it doesn’t bar other investors from suing. They could still come forward claiming to have proof that stock losses were caused by fraud. The case also has no bearing on FTC probe, which began last year.

Bloomberg News, edited by ESM

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