Pyramid Scheme Lawsuit Against Herbalife Dismissed
The lawsuit against Herbalife and its CEO, Michael Johnson, for fraud with shareholders and misrepresentations for the prevention of pyramid schemes has been dismissed.
Herbalife has been making the news of facing a lawsuit with accusations of defrauding shareholders through misrepresenting the nutrition products of the company. CEO Michael Johnson is also facing the accusations. Finally, a federal judge, Dale Fischer, made a decision to dismiss the case on Monday in Los Angeles.
Dale Fischer took this decision because the Retirement System and Oklahoma Firefighters Pension were unable to bring up enough defendants who had supposedly deceived the shareholders and misrepresented the Herbalife products to prevent pyramid schemes. The judge finally dismissed the case.
This lawsuit is not from investor William Ackman’s campaign against the company, who filed a lawsuit worth $1 billion against the nutrition company. However regarding the recent dismissed case, the company is denying the allegations of this being a pyramid scheme. This happens when the people, who are contributing, earn more profit by gathering others in order to sell products.
The CEO of the company was accused of being involved in the company’s everyday affairs, making him the accomplice in the act. He was said to benefit from the shares held by him in the company, which inflated and he sold the stock worth $126 million. Fischer on the other hand still concluded the case to be dismissed regardless of the accusations against Johnson.
This was the third time that the judge was in favor of the company while dismissing the accusations. Herbalife announced that it was pleased by the judge’s decision. The lawsuit was on behalf of the company’s shareholders. Another judge approved the company’s $15 million in settlement for Ackman’s disclosure of his short bet. Abdul Awad, one of the investors in the company, initially filed this lawsuit in April 2014.
In other news regarding the company, it was reported to collaborate with a non-profit youth center, along with LA galaxy foundation on November 25. The nutrition company gave away 1200 dinners, which was turkey, for Thanksgiving to the families in Los Angeles. The previous year 1000 families were served at the event. It is helping other non-profit organizations who support needy children through its nutrition supplements and other investments.
The company has its own non-profit corporation called, Herbalife Family Foundation which supports 100 programs around the world serving the essential nutrients to 120,000 children globally through the necessary permits for NGO’s to do the foundations work in the situated areas.
Herbalife stock closed at $57.98, going red by -0.36% on November 27.