The SEC Subpoena Patrick Byrne 'Forgot'
Another bombshell has emerged in the Overstock.com slo-mo train wreck: It seems that Overstock.com's CEO, Patrick Byrne, "forgot" to disclose in the company's public filings that he was served with a subpoena by the Securities and Exchange Commission a year ago.
This astonishing -- and, all kidding aside, inexcusable -- omission emerged on the Internet yesterday evening in Sam Antar's blog. The subpoena was first disclosed in the company's quarterly red-ink-a-thon (otherwise known as its 10-Q quarterly report with the SEC), which was filed with the commission yesterday.
The company also disclosed what was pretty well common knowledge anyway, which is that the SEC investigation of Overstock is ongoing. The 10-Q put it this way: "The Company and Mr. Byrne have responded to these subpoenas and each continues to cooperate with the Securities and Exchange Commission on this matter." (As if they had a choice.)
The key word is "continues."
As we'll all recall, Overstock received a wide-ranging subpoena, probing everything from its accounting to its blame-shifting on naked short-selling, on May 9, 2006. Byrne said in a typically childish press release that he "celebrated" getting the subpoena even though "some of the requests suggest the whispering of the blackguards." ("Blackguards" being Byrne-smear-speak for "critics of the company.")
That press release was filed with the SEC. So was a Form 8-K, which companies file with the SEC to disclose significant events.
Eight days later, according to the 10-Q filed yesterday, Byrne himself received a subpoena covering the same subjects as the subpoena on Overstock. The timing suggests that maybe the SEC didn't cotton to the "celebration" press release all that much.
Except for adding the stuff that I've underlined in red below to the 10-Q filed yesterday, neither Byrne nor anyone else from the company has ever uttered a peep on the subpoena that he personally received.
That's it. No press release. No Form 8-K. No "celebration." No reference to this bombshell in his thousands of words of ravings on Internet message boards. No disclosure on the company's website, which still only mentions receiving that one subpoena and does not mention the fact that Byrne himself was subpoenaed.
As you can see, for almost a year Byrne has concealed the SEC's subpoena of him personally from investors and the media. That would have been significant news that would have cast a considerable cloud over the company and Byrne personally. It would have certainly placed a downward tug on the price of Overstock shares. How much, we'll never know.
I think that's pretty rotten, and I'd like to know what the SEC is going to do about it. Overstock says the SEC is conducting an investigation "on" the company. Not true. The SEC is conducting an investigation of Overstock, and it's time we saw some results.
The SEC's continued scrutiny has had no effect on the depredations of Overstock.com's house stalker Judd Bagley, who was hired as "director of social media" and obviously devotes most of his energies to stalking and smearing critics of the company.
Bagley's latest gambit (aside from printing lies about me) has been to terrorize people who criticize the company on Internet message boards. He has sought to reveal their true identities on Overstock's antisocialmedia.net corporate smear site, and he has threatened to write to the employers of his critics.
Two posts (here and here) on the Silicon Investor message board yesterday -- during regular business hours, naturally, as cyberstalking is Bagley's job -- shows that Bagley is continuing to menace and terrorize critics of the company.
While every company has a nightcrawler or two crawling around the premises, Overstock.com is the only one that puts its worms on payroll and encourages them to attack the company's critics. The SEC needs to act against this nauseating spectacle.
UPDATE: Herb Greenberg has asked the company how come it plumb forgot to mention that subpoena.
Spin dead ahead! Close all watertight doors!
LATER: Byrne responded with a classic, rambling, nonsensical wad of vituperation, in which he concluded as follows:
. . . . the heart of the investigation is not, I would suggest, Overstock-centric, but rather, concerns itself with a strange set of relationships among ….. Well, let me just say that the irony here is just delicious.He then went on to talk about being "contacted by a source located at the core of the relationships alluded to above" who, I "would suggest," exists only in Byrne's fertile imagination.
Yes, I suppose Byrne "would suggest" that an investigation of Overstock.com isn't "Overstock-centric," wouldn't he? He is probably the only CEO in America arrogant and dishonest enough to make such a blatantly ridiculous statement.
That brings me back to the point I made earlier: The time has come for the SEC to take action against Overstock.com and its horror show of a CEO.
Oh, and Byrne didn't answer the question asked by the three reporters: why did it take one year for him to disclose his SEC subpoena?
Yes, I said three reporters -- Herb, Roddy Boyd of the New York Post, and Floyd Norris of the New York Times. Seems they're all working on negative stories on this slo-mo train wreck. Now they're all smeared (if you can call loony ravings a smear) as part of the "conspiracy."
The Patrick Byrne public relations genius strikes again!
Tonight, Sam Antar reiterated the advice he gave Byrne a few weeks ago: "When you can't spin, shut up!" This is excellent advice and hopefully Byrne will continue to disregard it.
STILL LATER: Yup, there was more. His tongue-shovel was busy yet again.
CORRECTION: Earlier I reported that Overstock.com's website no longer links to the "Sanitycheck" stock market conspiracy website, run by a wacked-out ex-used medical equipment salesman named Phil Saunders. In fact it still does, under a link deceptively labeled "market reform," but there seem to be fewer links than previously. So the naked shorting loons, whose wacko conspiracy theories are designed to divert attention from inept CEOs like Byrne, are still getting a free ride from Overstock.
© 2007 Gary Weiss. All rights reserved.
Wall Street Versus America was published by Penguin USA on April 6.
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