Quoth the Raven

About the Author Quoth the Raven

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5 Pressing New Questions Herbalife Ltd. Owes the Public Answers To

I’m going to keep this brief today – but hopefully these questions get some wheels turning – somewhere. Here’s a list of five simple questions that I think the company owes the investing public answers to. You can read them and be the judge of how pressing these are.


1. Why does it appear that anyone who signs up to buy product on the company’s new website gets immediately directed to a senior distributor? Geographically and from a “fair business” perspective this doesn’t make sense. I was directed to the Guzman’s out of Texas. Two similar experiments yielded results that landed QTR top distributors that have been involved with Herbalife Ltd. (NYSE:HLF) for at least 5 years and as many as 18 years. 

Is Herbalife just doling out business to top distributors? Where’s the love for the little guy that you’ve spent the last 30+ years allowing to churn in and out of the business?


2. In a recent press statement to CNBC, Alan Hoffman stated that “law enforcement AND regulators…” have sought information from Herbalife. If Herbalife is acknowledging DOJ/FBI (“law enforcement”), doesn’t that require an 8-K, as the company’s current disclosure regarding law enforcement agencies doesn’t seem to indicate that they are aware of any investigation?
This was the company line as of mid-2014:
Herbalife said: “We have no knowledge of any ongoing investigation by the DoJ or the FBI, and we have not received any formal nor informal request for information from either agency. We take our public disclosure obligations very seriously. Herbalife does not intend to make any additional comments regarding this matter unless and until there are material developments.”
No “informal” requests? Surely if that were to change, it’d be material, no?
And why does the company’s 10-K say that the company will disclose such inquires if they believe them to be material. For instance, if the DOJ calls and “inquires” about the business, isn’t that material in and of itself regardless of what Alan Quan and Des Walsh “believe?” After all, Herbalife believes they’re running a legitimate business, but I believe they’re running a criminal racket. Slight difference of opinion – can’t you just clear it up with the truth for all of us?
3. Why are the executives at the company telling Fox Business News how Bill Stiritz is or is not going to trade – why would HLF execs be commenting on how Stiritz (now a passive investor) is going to manage his position? What business is it of theirs, and are they prepared to be liable for this statement to investors who bought on it if it turns out Mr. Stiritz does sell his position?
4. Why is it being reported that the company is offering its “independent” distributors counsel? Didn’t we just hear for the last 2 years non-stop that HLF has nothing to do with their distributors actions? Surely this is a convenient answer when looking to deflect some of the absurd claims these people have made both about the product and the income opportunity.
But now that the company has been contacted by “law enforcement” – all of a sudden we’re one big happy family? Could it be because its easier to keep everyone “on message” when they’re using company counsel? Could Herbalife be nervous that independent counsel would take one look at the situation and say something to John Tartol like, “Cut a deal with the government, you’ve obviously committed mail and wire fraud repeatedly?”
Further, why would shareholders have to pay to defend Doran Andry et. al or whomever this is about? Why do shareholders foot that bill? Should they also start footing the bill for other distributor expenses?
5. What would cause the @HerbalifeTRUTH Twitter account, after more than a year of consistently posting 3-5 times a day, Monday through Friday, to simply stop Tweeting?
Could it be because they’re making statements like this one, which isn’t true and doesn’t seem to reconcile with the company’s above “SEC inquiry” statement from the 10-K put out just days later?
feb 13
If the public doesn’t demand these answers, I hope that the SEC does.

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