Herbalife (HLF) Stock: What To Think About Money Laundering Claims

0

Herbalife Ltd. (NYSE: HLF)

Herbalife has gone through quite a bit over the past 2 days. In recent news, the company has been alleged to be part of a money laundering ring. For some reason however, mainstream media seems to be staying away from the story. However, after the steep fall in stock value that we’ve seen from the stock, I believe that it is well worth talking about. Today, we’ll talk about the claims, how the stock reacted to the news, and what we can expect to see from HLF ahead.

Trade smarter and make more money with Tradespoon!

HLF Could Be In Some Very Big Trouble!

Money laundering is a big deal, and according to recent allegations, Herbalife may be taking part in this criminal activity. In a recent post by 10/10 Research, claims were made that the company is laundering money through various clubs.

In fact, the allegations state that HLF had incredible success. As a result, it was able to amass undocumented trades at more than 40,000 clubs outside of the United States. The research firm alleges that more than 40,000 clubs between Mexico and Columbia. By setting up fake accounts with the main distributor, it was alleged that the “cash [had] a chain of individuals to work its way up and through.”

Because of the set up, it is alleged that 40-60% of cash used by fake distributors could be returned to them in U.S. dollars. If HLF recognizes revenue in local revenue while paying distributors in U.S. dollars, well, that my friends is the picture of money laundering.

How Herbalife Responded To The Claims

As we would imagine, HLF quickly released a response to the allegations. The company said that to allege that they are involved in money laundering is unthinkable. In their response, the company completely denied the claims and backed away from the situation entirely.

What We’re Seeing From The Stock

As investors, we know that the news moves the market, even if the news is a rumor. In this particular case, there’s no clear answer as to whether or not these rumors are true, but we do know that the market is moving. Yesterday, Herbalife saw massive declines as investors digested the claims. Today, HLF is currently (12:17) trading at $59.95 per share after a loss of $1.18 or 1.93%.

What We Can Expect To See Ahead

Moving forward, I have a relatively mixed opinion of what we can expect to see from HLF. If the allegations are true, the company is in big trouble. However, if there is no proof of this and the allegations blow over, the company has a good chance of seeing gains ahead.

Don’t waste your time! Click here to find winning trades in minutes!

Never Miss The News Again!

Do you want real time actionable news delivered directly to your inbox? Join the CNA Finance mailing list and we’ll do just that! (Free for a limited time)

Subscribe Today!

* indicates required



[Image Courtesy of Wikipedia]

LEAVE A REPLY

Please enter your comment!
Please enter your name here