Herbalife Ltd. on Monday pointed triumphantly to a New York Times article that provided evidence the company’s leading critic was launching a smear campaign against the L.A. nutritional supplements company for his own advantage.

The Times report offers evidence that hedge fund manager Bill Ackman was engaging in market manipulation as it backed a letter-writing campaign urging securities regulators and state attorneys general to investigate the company. The Times presented evidenced the letters had been manufactured.

"For the past 15 months, Bill Ackman has executed an unfounded, relentless and fraudulent public attack on Herbalife’s business model, blasting Herbalife to any media outlet or hedge fund audience willing to listen,” the company said in a statement Monday. "Ackman’s unprecedented campaign to destroy Herbalife has now been exposed for what it is: a cynical, self-serving attempt to manipulate the market by buying his way into an investigation to cover his own reckless $1 billion dollar bet."

Ackman in turn, announced he will make a presentation Tuesday showing that Herbalife violated Chinese laws regulating direct selling and multilevel marketing, based on company documents he says were obtained from a former employee. Herbalife traditionally has used independent distributors to market its products, but in China was forced to set up retail storefronts where workers were considered employees.

The battle began in December 2012 when Ackman announced that his firm, Pershing Square Capital Management, had shorted more than 20 million of Herbalife’s shares in the company, because he was convinced the company operates as an illegal pyramid scheme and would eventually fail if regulators took action against it. The company's shares slumped for several months, but have since recovered with support from other investors.

Herbalife shares on Monday closed up $1.42, or 2 percent, to $66.16 on the New York Stock Exchange.


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