SEC Closes Investigation Of Herbalife
Posted on 26. Jun, 2008 by Ty Tribble in Network Marketing News
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Re-posted with permission from Len Clements (MarketWave Alert # 96):
Anti-MLM Zealots Lose Again!
SEC Closes Herbalife Investigation
No Enforcement Action Recommended
On October 29th Barry Minkow published a report claiming Herbalife, like Usana (see Rebuttal Report) was breaking Chinese law by illegally conducting MLM business within mainland China. Twenty seven pages of this 90 page report was an arid, repetitive attempt by über-anti-MLM zealot Robert FitzPatrick to convince the regulatory recipients listed on the report that Herbalife was a "Penny Stock, Pump & Dump, Ponzi Scheme". That list included the FBI and, of course, the SEC. On October 30th Minkow launched a web site called "Doomed by Design" where he attempted to make the same case, only with more colorful and dramatic pictures.
One day later, on November 1st of 2007, the SEC, which had already begun an investigation into insider trading a month earlier, notified Herbalife that they were expanding their investigation. The new issues they were looking into was the amount of product being personally consumed by Herbalife distributors. Within FitzPatrick's portion of Minkow's report he spent the bulk of his efforts on making a case that Herbalife was a pyramid scheme because not enough product was actually moving to bona-fide end user customers. In spite of crystal clear evidence to the contrary, Fitzpatrick is still touting a mythical "51%" of commissions coming from retail sales to non-participants as the FTC's established benchmark for legality. There could be no other reason for the SEC to be reviewing such internal consumption activity than to also be evaluating their status as a legal, legitimate network marketing company.
Well, today the SEC closed their investigation of Herbalife, and guess what? They found nothing requiring any "enforcement action". No evidence of an illegal pyramid scheme (apparently the FTC forgot to tell the SEC about that 51% deal), no concern about misbegotten revenue from China, no insider trading... nothing!
To read a press release regarding this notice, see:
http://biz.yahoo.com/bw/080625
By the way, here's where Team Minkow
supporters, such as head cheerleader Tracy
Coenen and the Yahoo! board bashers, will try to
claim that just because the SEC "does not
intent to recommend any enforcement action be
taken against the company" (the SEC's exact
words) this doesn't mean that they
didn't find any evidence of wrongdoing. Which
leaves us to ponder why, after investigating
Usana for ten months, and Herbalife for eight
months, and in spite of actually
finding signs of illegal activity, the
SEC just, as one Team Minkow supporter has
suggested, "didn't have the will" to take action.
This would be funnier if it wasn't for the
mainstream media's full and unchallenged
support of Minkow's original accusations, but
complete silence when his targets are vindicated.
Wall Street Journal? Forbes? Anyone?
Len Clements
MarketWave,
Inc.
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