Meritless Claims Don’t Prove Pershing Square is Under SEC Investigation (or That Herbalife Isn’t a Pyramid Scheme)

Pershing Square is under investigation by the SEC? That’s what Herbalife and some bulls want you to think.

Is there any real, irrefutable evidence of this? Well, that’s a little tougher to find.

Now that I guess we’re past NAV-gate, which Business Insider seemed to wrap up in its summary (and which is a moot point, because everyone and their brother knows that Ackman got crushed on VRX) we’re back onto FOIA-gate which, in keeping with the (initials)-gate playbook M.O., is a dung laden, circumstantial evidence based backwards obfuscation suggesting that Bill Ackman is under some sort of investigation for market manipulation regarding Herbalife by the SEC and that he’s received Wells Notices and subpoenas and oh my god, the sky falling! Hit the Herbalife offer hard! Buy, buy, buy -yes, even at twelve times (absolutely unsustainable) cash flow! Who cares!

Here’s the serious sounding/looking Tweets my buddy TheSkeptic21 put out today, which link to his scary looking blog headline:



And here’s TheSkeptic21 trying to “tip off” the press about this hot lead on Pershing and suggesting to me that Pershing has received a Wells Notice or a subpoena.


Save the obvious (they would have had to disclose a Wells Notice or subpoena to their investors – or, someone could just ask PSQ) I’m going to dive into other reasons why I don’t think any of this stuff has happened, but this first…

As an aside, let me say that I could really care less if Pershing is being investigated by the SEC, to be honest. I don’t think they have anything to hide, nor do I. I’m interested in this because it involved Herbalife, and I think Herbalife is a detriment to the world that fleeces people without the financial sophistication to know it for what it is. The SEC can investigate whoever they want – Pershing Square, me, Ed Snowden, President Barack Obama, those weird guys in the Interactive Brokers commercial that are fishing – none of it is going to change the fact that Herbalife is a company that seemingly relies on recruiting millions of people a year for a majority of its revenue. I realize that’s inconvenient. 

Anyways, TheSkeptic (or whoever) had FOIA’d for the following information:

The requested records were described as: (1) any matter under inquiry summary regarding Pershing Square; (2) any case closing recommendations regarding Pershing Square; (3) any investigation
recommendations regarding Pershing Square; (4) any investigation reports regarding Pershing Square; (5) any investigation opening reports regarding Pershing Square; (6) any investigation closing reports regarding Pershing Square; (7) any orders of formal investigation regarding Pershing Square; (8) any wells notices sent to Pershing Square; (9) any subpoenas sent to Pershing Square; (10) any correspondence between third parties and the commission related to the investigation of Pershing Square; and (11) any correspondence between Pershing Square and the Commission related to the investigation of Pershing Square.

If you read past number 1, you’ve already read too far.

“Any matter under inquiry summary regarding Pershing Square” could very well mean the SEC’s ongoing enforcement action against Herbalife, in which Pershing Square is likely providing (a metric shit ton) of evidence. TheSkeptic then continues:

What is also VERY interesting with respect to the requested records is that not a single requested item generated a “no responsive records” reply. When questioned about this, the SEC further confirmed that if in fact there were no responsive records that the 7(a) exemption would not have applied and thus could not have been invoked.

Sure, that would be interesting, if we knew the SEC was looking into Pershing Square, and not a company like Herbalife wherein Pershing could simply be “part of the investigation”. Judging from the bonehead CREW FOIA request months ago presented as a “gotcha” moment that actually highlighted hundreds of Herbalife complaints and another metric shit ton of e-mails between Pershing’s very serious lawyers, the FTC, the FTC’s expert on pyramid schemes, and other individuals – Pershing is providing evidence en masse, and often. 


So, if TheSkeptic (or anyone else) is interested in proving that Pershing has received a Wells Notice or subpoena, or is under investigation itself, here’s a few “no bullshit” ways to go about it.

#1 – Ask Bill Ackman, “Has Pershing received a Wells Notice or subpoena from the SEC?” My guess is the answer is going to be no.

#2 – Find out from the SEC if “ongoing enforcement proceedings” could include PSQ’s involvement in trying to blow the whistle on a company. My guess is the answer is going to be yes. If so, that discredits any definitive from FOIA-gate thus far.

Regardless, and cheekily enough, none of this disproves the real question at the heart of the matter – does Herbalife rely primarily on recruiting millions per year to run its business?

Speaking of market manipulation, this kind of reminds me of that time John Hempton Tweeted out to his 10,000+ followers that the “FTC had effectively cleared Herbalife”.

cleared That Tweet, inclusive of the 2 day old article attached to it, spiked the stock intraday.

2 day

Turns out that the FTC made no such announcement – and that was 5 months ago.

And months later, the other republican FTC commissioner, Josh Wright, resigned.

And then the FTC “effectively” just ended Vemma.

I’ll be here waiting for real proof of whether Pershing is under investigation, as well as the final determination over the fate of Herbalife.



“May the best analyst win.”