Herbalife settled a lawsuit with a former California distributor who claimed that the company was a pyramid scheme that did not let him make a profit, according to Bloomberg. The Federal Trade Commission, encouraged by Herbalife short seller Bill Ackman, is investigating the producer of weight loss shakes and nutritional supplements on allegations that it has a flawed business model which is more focused on creating new distributors than on selling quality products.
Herbalife settled on the $15 million demanded in the lawsuit. This can be seen by some as an admission of guilt. Herbalife had repeatedly denied Bill Ackman’s claims that the business is corrupt, but the current settlement must be a feather in Ackman’s cap.