Friday, February 02, 2007

After the Bell: Overstock Sues Everybody


Graphic Courtesy of Wall Street Folly

Overstock.com just announced that it was suing every white male north of the Susquehana River, all of whom engaged in a conspiracy to drive down the company's stock. A press release can be found here.
"I have a fiduciary duty to defend the company. These manipulative activities have caused tremendous damage to Overstock," said Patrick Byrne, chairman and chief executive officer of Overstock.com. . . "The best way to address and solve the problem is to get it in front of a jury of 12 Californians."
The lawsuit names "[John] Does 1-100," so when I say that Overstock is suing everybody, I am not exaggerating.

Leading the distinguished roster of plaintiffs is Mary Helburn, "executive director" of the "National Coalition Against Naked Shorting" astroturf front group, a noted intellect who has contended that naked shorting was the "real problem" at Enron.

The company is announcing fourth quarter numbers on Monday, but that is just a coincidence. This is not an effort to steer Monday's conference call excuse-a-thon away from the numbers, and if anybody says so -- well, shame on them!

(The numbers turned out to be far worse than the most pessimistic estimates. Coincidence! Coincidence!)

This is not a desperate effort to generate imaginary future revenues by filing a junk lawsuit that has zero chance of success! Shame on Overlawyered.com for suggesting that!

Overlawyered.com said:

The suit alleges shenanigans on controversial practices of naked short selling, but the economic theory of price manipulation and damages is simply bogus: if the perpetually-money-losing Overstock were really worth billions more, investors would have every incentive to squeeze the short-sellers, who don't have the market power to manipulate the price.
How dare Overlawyered apply logic to the endeavors of Patrick Byrne!

Above all, shame on Jack Byrne for publicly spanking his offspring on Friday:
"I don't agree with all the flamboyant statements and reckless statements he has been making," Jack Byrne said of his son. "I have to admire he sees evil and he's not going to stop ... but it really has nothing do with Overstock."
Of course he's not going to stop! What else is he going to do? Run the company?

The comedy continues. Reruns set for A&E next season (if Overstock.com is still there).

P.S. As for that stuff about going before a "jury of 12" -- this may turn out to be a case of "be careful what you wish for, lest it come true."

UPDATE: Overstock lawsuit successful (and Reg FD be damned)!

© 2007 Gary Weiss. All rights reserved.

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Wall Street Versus America was published by Penguin USA on April 6.
Click here for its Amazon.com listing and here for more information on the book, from my web site.

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