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Burned by BurnLounge?

June 4, 2014

Herbalife says court ruling is a win for MLM.

Herbalife, a multllevel marketer of nutrition and skin care products, has been embroiled in a battle with Bill Ackman who insists the company is a pyramid scheme in an effort to devalue the stock.

However, a Herbalife took heart from yesterday's ruling by the Ninth Circuit Court of Appeals in its decision in FTC v. BurnLounge, Inc. The company issued the following statement:

"Today's decision by the United States Court of Appeals for the Ninth Circuit in the FTC v. BurnLounge, Inc. validates product consumption by participants as a legitimate measure of demand for multi-level marketing companies and rejects Bill Ackman's fundamental thesis against Herbalife. This ruling from one of the country's most influential courts is consistent with Herbalife's position that the widespread demand Herbalife has demonstrated for its products, by members and non-members alike, confirms that it is a multi-level marketing company with proper business practices."

Not everybody, read shorts, views the ruling in the same light. Short-sellers insist the ruling is just an example of the Feds starting to crack down on pyramid schemes. It is only a matter of time, they insist, before Herbalife finds itself in regulators' crosshairs.

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