A George Soros-backed group is going after Bill Ackman for using the government to short Herbalife

Portia Crowe

A Washington-based advocacy group is accusing hedge fund managers of using "government processes" to benefit their firms' investments, Yahoo! Finance's Michael Santoli reported.

The group Citizens for Responsibility and Ethics in Washington is after Steve Eisman, who's campaigned to short some for-profit education companies, and Bill Ackman, who has publicly staked $1 billion shorting Herbalife.

The group claims the managers wrongly used government agencies to privately benefit their funds by urging regulators to investigate companies whose stock they are short.

Here's where it gets juicy: one of CREW's funders is a non-profit founded by hedge fund manager George Soros  who happens to own a major stake in the Herbalife (3.8 percent, according to a recent Bloomberg report).

If Soros has any involvement in the claims, it would not be the first time he and Ackman have gone head to head over Herbalife.

Soros took a stake in Herbalife, which sells nutritional supplements and weight loss products, after Ackman accused the company of running a pyramid scheme. The Pershing Square CEO has also accused Soros of stock manipulation and reportedly brought that complaint to the SEC.

Now CREW, which Santoli reports has received at least $800,000 from Soros' Open Society non-profit, is pushing back on Ackman's pyramid scheme claims.

But this is not the first time a hedge fund manager has alerted authorities to possible misbehavior and benefitted from the result. As Business Insider's Julia La Roche pointed out, the recent Lumber Liquidators scandal is an example of how that can be a force for good.

And as Yahoo! Finance's Santoli notes, the battle to protect multi-level marketing companies and for-profit schools seems like an unlikely one for a usually liberal group like CREW.

Read the full story at Yahoo! Finance>>

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