Market Insider - Herb Greenberg

Herbalife, whose stock tumbled last week after hedge fund manager David Einhorn asked a few questions on the company’s earnings call, is no stranger to controversy.

Tiffany Rose | WireImage | Getty Images Herbalife 24

The company first hit my radar in March after CEO Michael Johnson said on Jim Cramer’s Mad Money that Herbalife

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[HLF  Loading...      ()   ] does research “around the clock.” Yet in its 10-K, the company discloses that its research spending is “not material.”

Best known for its weight-loss shakes, Herbalife likes to bill itself on its website as a “global nutrition company.” But it’s really in the business of multi-level marketing — or as it calls itself: “A global network marketing company that sells weight management, nutritional supplement, energy, sports & fitness products and personal care products.”

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Tiffany Rose | WireImage | Getty Images Michael Johnson, Herbalife CEO

So far this year, Herbalife CEO Michael Johnson is the highest paid of all CEOs, based on a just-released compensation survey by GMI Ratings.

According to the corporate governance research firm, Johnson’s total compensation, including the realized gain on its options, was $89.4 million.  » Read More

With its first-quarter earnings release, Green Mountain’s days as a growth story are officially over.

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CEO Lawrence Blanford said as much in the company’s press release when he commented, “After several quarters of robust adoption, we now expect a more moderated growth trajectory going forward for both Keurig brewer and K-Cup pack sales.”

“Moderated growth trajectory going forward” is not what you want to hear form a growth company.

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Tiffany Rose | WireImage | Getty Images Herbalife 24

Four years ago then-convicted felon Barry Minkow, who had turned from white-collar criminal to claiming to be white-collar fraud-buster, had a new target: Herbalife, the multi-level marketing company best known for its weight-loss shakes.

Shares of Herbalife

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[HLF  Loading...      ()   ] tumbled 20 percent Tuesday after hedge fund manager David Einhorn asked several questions on the company’s earnings call. I started raising questions about the company in March.

Minkow’s concerns were a laundry list of issues. He even included a taunting video, with the tagline, “Should this company try to sue us, it’s been tried and tossed.”

Herbalife responded, saying that “we stand behind the integrity of our company.”

Herb Greenberg
Senior Stocks
Commentator

Then, several months later, Minkow’s criticisms of Herbalife disappeared from his website.

Why? According to court documents, Herbalife paid Minkow $300,000 to shut up.

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If you get away from any of the spin, and with blinders on just look at the numbers, you can’t help but wonder whether Netflix is headed down the same road as Blackberry maker Research In Motion.

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The company’s shares tumbled on concerns over its guidance and other metrics.

But for the most astonishing part of the story, and why this looks like what I like to call a “walking up the down escalator” business model, just check out the numbers below.

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The elephant in the room in the wake of the Wal-Mart

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[WMT  Loading...      ()   ] fiasco is whether we should accept, cover-up or no cover-up, the concept of bribes, graft and outright corruption as simply a way of doing business abroad?

The government says no — sort of — in the Foreign Corrupt Practices Act.

Honestly, after reading through the FCPA, this much is clear: You can drive a truck through the gray areas of the law.

What’s the difference between a bribe and a legal “facilitating” payment? You read it and tell me.

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With each passing SEC suit against a once high-flying U.S. traded Chinese company, it becomes striking how pervasive the alleged fraud was in some of these companies.

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Over the past six months, the SEC has filed charges against just three companies, but the U.S. registrations of 34 Chinese companies have been revoked; 40 in the past 12 months.

The most recent to be charged, with a complaint filed Monday: SinoTech Energy, which the SEC alleged overstated the value of its primary operating assets. The SEC also charged that its chairman, Qinzeng Liu, “secretly” siphoned at least $40 million from the company’s bank account last summer.

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Whenever I see a handful of analysts cut a company’s quarterly estimates all at once (or within a few days of one another) I always wonder: Coincidence?

Source: Mylan.com

Enter Mylan

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[MYL  Loading...      ()   ], the generic drug maker and no stranger to my readers. My last piece a month ago raised red flags over its accounting and its recent move to forecast earnings six years out.

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