Disclosure: Barry Minkow is currently shorting Herbalife stock, and intends to short any stock he reports on in the future. Details found on page 3 of this document.
Today Barry Minkow and Fraud Discovery Institute released a list of the Top Ten Red Flags of Fraud at Herbalife, LTD (NYSE:HLF):
1. Nearly 70% of Stock Holdings Dumped:
Approximately seventy percent of senior managements stock holdings were dumped in 2008. While this promotional senior management team touted record earnings, sales and growth potential, it simultaneously dumped approximately 70 percent of their entire holdings. In 2008 alone, senior management dumped and subsequently received over $40 million and in 2007 over $130 million, for a stunning $170 million total. This is one of the most aggressive insider dumpings in recent history, when one simply compares the shares-sold to the percentage of total ownership. To solve the “no more to dump” problem, CEO Michael Johnson received additional stock options this week.