LOS ANGELES (AP) — A judge has dismissed a lawsuit by Herbalife shareholders who claimed that the business structure and marketing practices of the weight loss and nutritional supplements company violated the law and that they lost money in what amounts to a pyramid scheme.
U.S. District Judge Dale Fischer in Los Angeles ruled Tuesday that plaintiffs didn’t show that accusations by activist investor Bill Ackman are evidence of fraud by Herbalife.
Ackman, who runs Pershing Square Capital Management, bet heavily against the company’s stock, describing it as a pyramid scheme.
The judge said that because no fraud was proven, the shareholders can’t show that losses they suffered were caused by the company’s perceived misrepresentations.
Herbalife says it welcomes the judge’s decision. The company says it remains confident in its business model.