Overstock.com Goes Opinion Shopping
The holiday season is upon us, and the always-predictable Overstock.com has gone shopping -- for an auditor.
Although it did not surprise readers if the Going Concern blog, I was a bit startled to read that Overstock,com's ever-wacky CEO Patrick Byrne would have the gall to auditor-shop as he did, hiring KPMG, after firing his last auditor, for daring to tell Wacky Patty that he has to restate his financials.
White collar crime-fighter Sam Antar observes that Byrne reneged on previous assurances that he would not not hire new auditors until after the SEC Division of Corporation Finance completed its review of the firm's accounting practices.
In this exchange at the company's recent conference call, Wacky Patty himself admitted that hiring an auditor before the SEC does its work would be opinion shopping:
Q. Since you've dismissed your auditor for a very specific accounting choice, when you go to select a new auditor, how do you prevent yourself from being accused of opinion shopping?So Byrne is, by his own definition of opinion shopping, engaged in precisely that practice.
Jonathan Johnson (Overstock.com President): That's a great question, Louis, and that's part of the reason that we've decided not to select a new auditor until this -- until we resolve this issue with the SEC.
We do not want to be accused of opinion shopping. We'd like the SEC to help us figure out -- we'd like them to say we've done it the right way or we've done it the wrong way. Once they say one of those two, we don't need to opinion shop.
Byrne: But, so, I would even say to the point that when people have contacted us, we have discouraged any communication on the grounds that we got -- for just that reason -- well, I have the -- no matter who we talk to now, then whoever we ultimately pick, people are going to say, well, you did this because you opinion shop.
So we're really not having discussions with anybody. It's nice to get phone calls, but we're not talking to anybody until we get through this just to prevent -- just as a prophylactic measure.
Going Concern notes:
Sorry, dear reader but apparently the high profile cat fight between the company and Grant Thornton wasn’t enough to scare KPMG off. Not even the very public revelation of Patsy’s creepy-ass stalking of Overstock critics in the financial media and blogosphere caused the KPMG partners in SLC to turn this client down.
Oh, and not to mention a management team who thought that filing unreviewed 10-Q was the best course of action.Hey, somebody had to get the job eventually. Bernie Madoff's auditor is unavailable, so Byrne chose the next best hing -- the auditors who, as Sam points out, let Crazy Eddie's get away with murder.
Another accounting blogger notes: "KPMG just sold its own ass up the river."
It wouldn't be the first time. Let's not forget New Century Financial.
Over the holiday season, while it was opinion-shopping, Overstock did something almost equally amazing: announcing a "line of credit" with U.S. Bank that is the kind given to welfare mothers in Brownsville. The company has to keep an equivalent sum on deposit.
That's hardly noteworthy, but this is: Overstock president Johnson had the audacity to tell the Salt Lake Tribune that "the terms of the new financing agreement with U.S. Bank are better than the terms of the Wells Fargo financing that it replaces."
Less money? A deposit requirement? File that under "baldfaced lie."
© 2009 Gary Weiss. All rights reserved.