Greenberg: Moral of the Herbalife Story*

SAN DIEGO (TheStreet) -- The asterisk is for the obvious "so far." 

When news broke this morning that Massachusetts Sen. Ed Markey was calling on the SEC and FTC to investigate Herbalife (HLF)

The first two are self-explanatory. Let me explain the third -- and consider the source: I did the documentary Selling the American Dream for CNBC.

With the stock taking an 11%-12% hit, and trading down to levels it hasn't seen since November, I have three thoughts:

  1. This shows what weak hands are in the stock; in other words, investors who have piggybacked on the reputations of investors like Carl Icahn and George Soros and veteran food industry CEO Bill Stiritz, all of whom bought the stock
  2. With the stock down, you would think the company would announce a buyback.
  3. With the stock down, you would think Icahn and others would buy more shares.

Reality: Nothing would surprise me, but this I do know: The questions asked by Markey in letters to the regulators and Herbalife CEO Michael Johnson are compelling and, in some ways, get to the heart of questions that have been dodged.

My favorite, asked of Johnson: "Why have your statements change materially over time about the percentage of sales outside the network?" It's a great question. Looking forward to the answer.

-- Written by Herb Greenberg in San Diego

Herb Greenberg, editor of Herb Greenberg's Reality Check, is a contributor to CNBC. He does not own shares, short or trade shares in an individual corporate security.

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