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Bill Ackman, the activist investor, has been painted as a loser in his yearslong quest to shut down Herbalife, the nutritional supplement company that he bet against, contending it defrauded customers and was a pyramid scheme.
Two weeks ago, Herbalife paid $200 million to settle a case brought by the Federal Trade Commission. Herbalife's stock rose after the settlement, which showed that investors took the development as little more than a slap on the wrist.
On Wall Street, Mr. Ackman's rivals snickered. The headlines have been withering: "Herbalife Settles Pyramid Scheme Case With Regulator, in Blow to Pershing's Ackman," Reuters wrote. "Herbalife Scores Huge Victory in Its Bill Ackman Battle With F.T.C. Settlement," Forbes said. And on and on.
And yet there's something grossly wrong with this assessment.
Whether you like or hate Mr. Ackman — my column in November was as critical as any about some of his escapades — the F.T.C.'s complaint is a vindication of Mr. Ackman's claims.
Yes, Mr. Ackman has lost a ton of money for his investors on his bet against Herbalife. But with the F.T.C. settlement, he has won a moral victory that could very well help hundreds of thousands of Herbalife's defrauded customers, who are mainly low-income immigrants who would most likely not have had any legal recourse had Mr. Ackman not loudly called the company into question.
I have to admit I didn't fully appreciate the magnitude of Mr. Ackman's accomplishment until I watched a new documentary about his battle with Herbalife: "Betting on Zero." The movie premiered at the Tribeca Film Festival in April; its title is drawn from Mr. Ackman's prediction that the company's stock would one day be worth nothing.
The film, directed by Theodore Braun, is remarkably poignant and is in negotiations for a distributor; it is being screened this Saturday in East Hampton. At the end of the movie, during the credits, Mr. Braun shows Edith Ramirez, head of the F.T.C., at a news conference last month announcing the settlement.
Herbalife, she said, was responsible for "deceiving hundreds of thousands of hopeful people." She described "the dream portrayed by Herbalife" as an illusion. She went on to say that "the vast majority of Herbalife distributors found they could make little or no money selling Herbalife products."
Worse still, Ms. Ramirez said, her agency had determined that "people who leased space and opened a nutrition club and worked long hours made no money or lost money." And, she concluded: "The small minority of Herbalife distributors who did make a lot of money were paid by Herbalife not for selling the company's products, but for buying the products themselves and then successfully recruiting large networks of others to do the same."
In other words, she described pretty much exactly what Mr. Ackman has been saying for the last three years.
According to Mr. Ackman in 2014, "These people work really hard, and unfortunately, they don't realize that they've been defrauded."
Herbalife repeatedly said that was a lie. "These accusations are provably false," Herbalife's chief financial officer, John G. DeSimone, told The New York Times in 2014.
And here we are today, and they were true.
"If it were not for Bill, I don't think the F.T.C. would have launched an investigation," Mr. Braun, the director, said. "Bill is unquestionably the catalyst."
Herbalife refused to participate in the film, though Mr. Braun said he met and spoke privately with Herbalife's chief executive, Michael O. Johnson, for several hours.
Ever since the film — which ends by seemingly sympathizing with Mr. Ackman — was first screened, Herbalife has been on a crusade against the movie. It bought the domain name "bettingonzero.com " so that when the movie's title was searched in Google, people would stumble upon a website decrying Mr. Ackman. The site questions whether the movie was financed by Mr. Ackman — a question I asked both Mr. Braun and Mr. Ackman. Both said it wasn't, and Mr. Braun said he hadn't met Mr. Ackman until 2013 when he approached him about the film.
The website also noted that the producer of "Betting on Zero" and Bill Ackman were on the same crew team in college. According to Mr. Braun, one of the producers, Devin Adair, "overlapped" with Mr. Ackman at Harvard, but said that they were not friends and hadn't talked in decades. Ms. Adair was the coxswain for one of the crew boats; Mr. Ackman rowed on a different boat.
Mr. Braun — who previously made "Darfur Now," a documentary about genocide in the Darfur region of Sudan that was produced by the actor Don Cheadle, among others — said that when he first began researching the battle between Mr. Ackman and Herbalife, he wasn't sure who was on the right side. He said he wanted to produce a film that explored "the place of money in America."
The battle has been portrayed as either a pitched fight between a narcissistic, know-it-all investor seeking to bankrupt a company for profit (that's Herbalife's view) or as a crusading moralist trying to right a wrong. It may be a combination of both.
"This is an 'Emperor Wears No Clothes' story," Mr. Braun said, explaining that the charm of that fairy tale "is it's told by the sweet little boy." The message, he noted, is harder to accept when "the messenger is a tough hedge fund manager."
And while there have long been moral questions about the very concept of "shorting" — betting against a company's stock — it is hard not to look at this particular situation as an example of an investor acting as a check on the market.
Admittedly, there were questions about Mr. Ackman's tactics. He spent more than $50 million on his campaign, lobbying regulators and members of Congress to look into Herbalife's practices. But if Mr. Ackman didn't do it, who would? Complaints about Herbalife have been made for years, but it wasn't until Mr. Ackman very loudly got involved that the government stepped in.
There are those who worry that Mr. Ackman's involvement in Herbalife means the oligarchs have taken over — that billionaires have become de facto regulators. It is a valid concern. And the billionaires may not always be on the right side. (Mr. Ackman has been involved in some investments, like Valeant Pharmaceuticals and J. C. Penney, that didn't go his way.)
But, in this instance, he won a victory that will have real benefits for many people.
And yet on Wall Street, his victory is considered hollow because he has so far lost money on his bet against Herbalife.
"Truth, candor and transparency are at odds with the measuring stick that Wall Street applies," Mr. Braun said.
For now, Herbalife is heralding the settlement as a victory that will allow it to move on with its business. But Mr. Braun says that if the company genuinely changes its business model to conform with the settlement, "I can't imagine a way for them to be profitable."
"I don't think this is over," he added.