Staking $1 Billion That Herbalife Will Fail, Then Lobbying to Bring It Down
Representative Linda T. Sánchez, Democrat of California, sent a letter to the F.T.C. asking it to investigate Herbalife. Mr. Ackman obtained a copy of the letter before it was made public.
By MICHAEL S. SCHMIDT, ERIC LIPTON and ALEXANDRA STEVENSON, NYT MARCH 9, 2014
WASHINGTON — At a Midtown Manhattan steakhouse last June, William A. Ackman, the activist hedge fund manager who had bet a billion dollars on the collapse of the nutritional supplement company Herbalife, offered his latest evidence to a handful of other hedge fund managers about why the company’s stock could soon plummet.
Mr. Ackman told his dinner companions that Representative Linda T. Sánchez, Democrat of California, had sent a letter to the Federal Trade Commission the previous day calling for an investigation of the company.
The commission had not yet stamped the letter as received, nor had it been made public. But Mr. Ackman, who had personally lobbied Ms. Sánchez and stood to profit if the company’s stock dropped as a result of the call for an inquiry, already knew what it said, and read from a copy of it that he had on his cellphone.
When Ms. Sánchez’s office ultimately issued a news release a month later, it was backdated as though it had been made public the day before Mr. Ackman’s dinner talk.
The letter was a small hint of Mr. Ackman’s extraordinary attempt to leverage the corridors of power — in Washington, state capitols and city halls — for his hedge fund’s profit after taking a $1 billion financial position called a short, a bet that will pay off only if Herbalife’s stock drops.
(More here.)
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3 Comments:
this is how crony capitalism works and it's no surprise Ackman's crusade is being done under the Obama administration - hardly the most transparent administration in history, but certainly the one that has abused crony capitalism.
The lesson here is it is easier to lobby government than it is to compete in the market. Those that pay to play will win, those that don't will fall by the wayside being regulated out of business.
Welcome to 21st century America thanks to Obama.
It is naive to think this is the "one" administration under which crony capitialism has occurred. The private sector that Republicans love to celebrate became large and prosperous only with aid—financial, legal, even regulatory—from public officials. The real political question has never been, should government be large or small but whose interests should it serve? Corporate executives have always understood this fact and learned how to work the system that right-wing ideologues would have us believe is a recent invention of “socialist” Obamaites. For example, the health insurance industry paid billions of dollars to lobbyists since the 1990s to guarantee that any universal health care law would not damage their business. As Ezra Klein writes in The New York Review of Books, this kind of money “gives you an opportunity to shape the way members of Congress think—an opportunity that is not available to those who don’t have $4.86 billion to spend on lobbying.” And so the Affordable Care Act, which has many virtues, does not include a public option.
Does VV take seriously anyone who posts themselves as Anonymous? I sure don't.
No administration has abused its use of crony capitalism more than the Obama Administration, Ms Anonymous. None.
Look at the recent nominees for ambassadors to foreign countries - all 'pay to play' back scratching. Worse than George Bush. At least there were people Bush nominated that actually had been to the countries they are being nominated for ambassadorships.
And I notice you claim a 'you didn't build that' stance when it comes to the private sector. Only with the help of benevolent government experts did anyone ever get anywhere. What a crock of shit. What government help did Steve Jobs get? Bill Gates? Larry Ellison? Jeff Bezos? Warren Buffett is the biggest crony capitalist of them all using his political connections to enrich himself. And it works, but it is the exception, not the norm as you would suggest.
As for the insurance industry lobbying congress, big deal. Companies that are regulated by the government aren't allowed to lobby the very govenrment regulating it? Really? You believe that strongly in fascism?
If you wanted to fix the health care system to allow more people to be covered, you would have divorced insurance from employment and allow people to buy their own insurance and give the deductions businesses get to the individual. The only mandate there would be is guaranteed renewability so you can never be dropped from your insurance as long as you pay your premium - and you can even subsidize those who can't pay their premium, I have no problem with that. And you can buy a policy written in any state that covers what you want rather than being bound to the coverage rules of the state where you reside (minnesota residents must pay for alcohol treatment coverage, mental health treatment coverage, even gender reassignment coverage in their premiums). This is how you get young people to buy health insurance - not some public option. Then you have medical savings accounts you pay in to after tax for out of pocket expenses that roll over year to year rather than use-it-or-lose-it cafeteria plans. Then you offer tax deductions for premiums on long-term care policies to encourage people to buy a long-term care policy when they are young.
There is nothing redeeming about the Affordable Care Act because the incentives are all out of whack. Those who are enrolling are mostly the poor who would have otherwise enrolled in Medicaid. And speaking of Medicaid, we can probably wind that program down now that we have the ACA, right? I mean, if everyone must buy a health insurance policy now, and those that can't afford their premium can get a subsidy, then we obviously don't need a program just for the poor any longer.
You are just a socialist shill for Obama, Ms Anonymous. A useful idiot as Lenin would call you.
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