The Five Dumbest Things on Wall Street This Week: Feb. 1

5. Herbalife Hysteria

For the love of Barnum and Bailey! The Herbalife ( HLF) circus has officially grown larger than its warring clowns.

Herbalife insanity hit new heights this week, even without the help of the hedge fund hotshots responsible for the frenzy in the company's stock. Shares of the supplement seller sank 8% to $40 Monday on the news that the Federal Trade Commission was shutting down Fortune Hi-Tech Marketing, a totally unrelated Kentucky-based direct-sales company, for operating a pyramid scheme. This latest act in the Herbalife three-ring circus -- those rings currently being occupied by activist investors Bill Ackman, Dan Loeb and Carl Icahn -- came only a single trading day after the insane on-air battle between long-time enemies Icahn and Ackman.

That's right, folks. No Ackman. No Icahn. No Loeb. No problem, it's still fun for investors of all ages.

The spectacle actually started Monday morning when the FTC posted a media advisory on its Web site announcing an afternoon press conference in Lexington, Kentucky, regarding an action against an "alleged pyramid scheme." The FTC's cute little tease titillated traders into dumping their shares of both Herbalife (Ackman's $1 billion short and Loeb's long), as well as fellow direct marketer Nu Skin ( NUS) (a reported Loeb short).

(Icahn's position in both stocks remains unclear. His position that CNBC's Scott Wapner is a meanie has not changed since last Friday as far as we know.)

Of course, the Herbalife carnival would not be complete without barking from CNBC's Herb Greenberg. Herb was quick to point out that any government activities would likely come from its L.A. bureau where Herbalife is based, rather than Lexington. Herb was quickly proven right when CNBC started flashing alerts that did not expose the mystery scammer's true identity, but confirmed it was not Herbalife.

That honor would be held for the day's real ringmaster, C. Steven Baker, the director of the FTC's Midwest region. Once CNBC had completed its sideshow, Baker stepped up to the mic at 1 p.m. and revealed that Uncle Sam's true target was the non-publicly traded Fortune Hi-Tech Marketing.

"Pyramid schemes are more like icebergs," Baker said. "At any point, most people must and will be underwater financially."

Yep, Mr. Baker, there's a sucker born every minute, just like P.T. Barnum proclaimed. This Herbalife extravaganza, however, is truly turning into one for the ages.

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