Now in the news, CNBC reports that federal law enforcement agencies recently contacted 10 or so mostly top Herbalife members for information about their own business practices.
CNBC also says Herbalife has received inquiries about irregular trading in its stock as part of a broader investigation into possible market manipulation.
This is significant because it is a great counter to the recent report that the FBI was questioning people who were advocating for the shorts, which itself was a brilliant counter attack on the shorts.
As I understand this type of marketing, the leading distributors have spent years developing networks of distributors under them. If any of them leave, they could take a huge team of marketers with them. However, where would they go if they left? They may be tied in to Herbalife with no place to go.
Now hear the brilliant counter to the counter to the counter. When asked for a comment Herbalife spokesman told CNBC that there is reportedly an ongoing federal criminal investigation into the Ackman campaign against Herbalife "for stock manipulation and law enforcement and regulators have recently sought information from Herbalife and others relating to that investigation as well as trading in Herbalife shares and allegations about our business practices. We are cooperating with these requests for information, remain confident in the integrity of our business practices, and are hopeful Ackman's long-term campaign of distortion will be found to be illegal."
In other words if you believe Herbalife, and we make no judgment on the merits of one side or another, Ackman is the lawbreaker and the manipulator being investigated, not HLF.
It is often very effective to accuse your enemy of what he accuses you of. If people will listen to his allegations of one type of misconduct, they will listen to your allegations of that same type of conduct. This will at least produce a stalemate.
As one who investigates stock market misconduct, when a suspect makes bitter allegations against someone that are unfounded, we immediately look for the accuser's misconduct of the same type. The accusers accuse others of doing what they are doing. This is a wonderful investigative tool.
Again we make no judgment here on one side or another. We are not enough familiar with the facts and we note both sides are making similar allegations.
We simply note these things as being of interest to those shorting or fighting shorts.
Attack, HLF is illegal, counter attack is that Ackman is illegal, counter counter is HLF is being investigated by federal law enforcement authorities, and counter to the counter counter, Ackman is the one being investigated.
Great game!
