An Herbalife short seller is suing billionaire investor Carl Icahn and Herbalife’s banks, claiming they are letting the distributor of nutritional and weight loss products perpetuate “one of the largest frauds in history.”
Daniel Ravicher, a New York lawyer and investor who said he has a “substantial short” position in the stock, claims Icahn has “aided and abetted” Herbalife’s alleged fraud by becoming the single largest shareholder, with a 15.9 percent stake.
Ravicher says Icahn is motivated “solely by a desire to exact revenge” on rival hedge fund manager Bill Ackman, who bested him in a legal battle after a 10-year court dispute.
The suit, filed yesterday in Manhattan federal court, blames Herbalife’s banks for extending a line of credit to the company. Ravicher is also an investor in the three banks he sued — Bank of America, JPMorgan Chase and Wells Fargo.
Herbalife, a multilevel marketer with Los Angeles headquarters, has been labeled a pyramid scheme by Ackman — who has made a $1 billion short bet on the company’s stock.
Herbalife, which has denied the accusation, has not been charged by any US regulator with wrongdoing.
Ravicher accuses Icahn of “scheming” to settle a score, “stating on public television that he hopes to create the ‘greatest short squeeze of all time’” on Herbalife.
Icahn’s comments were made in a riveting half-hour debate between him and Ackman that aired on CNBC.
Icahn did not respond to a request for comment. The banks declined to comment.