Thursday, May 31, 2007

The Bancrofts Agree To Meet With News Corp.

Here we see the family's trustees signing the appropriate documentation.

© 2007 Gary Weiss. All rights reserved.


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


Wednesday, May 30, 2007

The Grotesque Story Gets Grotesquer

News emerged today that the California Court of Appeals knocked down Gradient Analytics's effort to toss out's junk lawsuit. No surprise here. Gradient is appealing. No surprise. Overstock will be coming out with a (no doubt suitably juvenile) press release soon. No surprise.

But here's the latest twist from a company that always manages to sink to new lows:

I know that Overstock has an upcoming press release coming down the pike because I read about it on a limited-circulation message board, in an anonymous post.

Here's the post:

This is unsigned, but I know from previous posts that the author of this post is none other than the glassy-eyed individual at the top of this item:'s nauseating Director of Communications and resident stalker, Judd Bagley.

Reading atrocities like this makes me wonder: Does the SEC ever plan to do anything about Overstock's constant nose-thumbing at Regulation FD?

The "report abuse" link at the bottom right corner of the post links to the crackerjack management team of Investor Village. Given Overstock's track record, it should take one instead directly to the SEC's Division of Enforcement.

UPDATE: Sure enough, the reigning clown of corporate America issued a press release filled with all kinds of "oh my goodness" shock value. Byrne says he "celebrates" the court ruling, much as he had "celebrated" the SEC subpoena of his company -- the one that came one week before the subpoena of him that he failed to disclose for a year.

Funny how Byrne "celebrates" opportunities for his serial lies, inept performance and misconduct to be subjected to the third degree by hostile attorneys and by the SEC. I haven't seen this much raw, blustering defiance of SEC scrutiny since the days of Bob Brennan of First Jersey Securities.

Herb Greenberg's take on the latest tidings can be found here. Herb notes that the case centers around a character named Dimetrios Anifantis:

Yes, that's the same Dimetrios Anifantis whose declaration -- "under the penalty of perjury" -- inolved an outright disregard for the truth when it came to testimony about yours truly.

That's right -- they've tried to drag the press into this for daring to raise red flags over the company's precarious prospects. My early writeups included this, which harkens back to the origination of Overstock's fight with Gradient (then Cambelback Research), and this. And if you haven't read my write-ups on Anifantis' antics previously, you can read them here and here and here. If his recollection of the fact and his feeble efforts and inuendo are as bad about everybody else in his line of fire, you have to wonder how credible Anifantis really is as a witness. Could that be one reason the SEC, with its subpoena power, recentlly dropped its case against Gradient?

Let's not forget how Anifantis's Senate testimony was scripted by, in one of the many creepy episodes in this corporate train wreck.

Thanks to the indulgence of the California courts, this nutty, dangerous, junk lawsuit is being allowed to proceed. But much as I regret the legal bills it is inflicting on the defendants, I look forward to watching this legal circus, and the resultant discovery proceedings, as they progress.

© 2007 Gary Weiss. All rights reserved.


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

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Mark Cuban Squeezed?

Mark Cuban's Sharesleuth insider-trading project has a new item up on its website -- the first in a long time. Nothing really notable in it, just a hammering away at shady associates of one of Sharesleuth's targets/Cuban short positions, Utek Corp.

What's interesting, though, is evidence of what I've been saying from the start, which is Sharesleuth is a boneheaded idea from pretty much every standpoint -- journalistic and as a business venture. I say that because it looks as if Cuban has been squeezed. Most of his short position in Utek has been closed out against his will.

The latest item contains the following disclaimer:

(Disclosure: Mark Cuban, the majority member of LLC, has a current short position in UTEK of 12,512 shares. He had sold short as many as 90,488 shares, but most of those were bought in over the past few months. He did not intentionally cover his position. Cuban also is short 10,000 shares of Xethanol Corp.,another company that is mentioned in this story. Christopher Carey, editor of, does not invest in individual stocks and has no position in the shares of UTEK or Xethanol.)
Note the discrepancy between the above disclosure and Cuban's most recent one, on Feb. 25, in which he reported having a 99,000 share short position.

Remember that Sharesleuth reported on Oct. 25 that Cuban had a 75,000 share short position at an average of $20 a share. That did not go up as of Dec. 12, according to a comment on Sharesleuth.

So obviously the 24,000 (or was it 15,000? What happened to that 9,000?) shares were shorted between Dec. 12 and Feb. 25. As you can see, the price of the shares hovered mainly in the $10-$12 range during that time.

And then, after Feb. 25, kaboom! The Big Squeeze. Look at the chart. Stock bounced up to $18 and now is at about $15. Oh my. Sometime after Feb. 25, Cuban's broker bought the shares back -- the hated "buy-in." I imagine he realized some kind of profit on the shares he shorted at an average of $20, but he would have taken a loss on the shares he shorted over the winter.

He certainly wasn't able to keep the short position as long as he had wanted. Poor dear.

My point is not to gloat (well, not entirely to gloat) but rather to point out that this so-called "business model" ain't working. You can't reliably finance a "news operation" by trading ahead of the stocks you write about. Cuban is proving it with his Utek buy-in imbroglio. Apparently you can't make more than pocket change doing this.

Still wanted is the public-spirited billionaire who will finance a financial investigations website without thought to personal profit. Does such a creature exist?

© 2007 Gary Weiss. All rights reserved.


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

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Tuesday, May 29, 2007

Ellis and Me

My latest Muckraker column is a reflection on immigration from the standpoint of my mother's family's hundredth anniversary hopping off the boat on Ellis Island. (The boat was the RMS Carmania, pictured above.)

Read it at

© 2007 Gary Weiss. All rights reserved.


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

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The Private Dick That Patrick Byrne 'Forgot'

Patrick Byrne's worst enemy -- Patrick Byrne -- strikes again

One of the fascinating things about following, as it self-destructs, is the suspense: What embarrassing gaffe will it make next? What cyberstalking atrocity will be committed by its nauseating resident stalker and official spokesman, Director of Communications Judd Bagley? What SEC rule will it ignore or violate? What lie will emerge from the ever-flapping mouth of CEO Patrick Byrne?

Byrne was jawing away on the Investor Villlage message board --his fifty-second post this year -- over the Memorial Day Weekend, and proved once again that he is the gift that keeps on giving. He is truly the fraud investigator's best friend, and his own worst enemy.

In an post from his pseudonym "Hannibal" on the limited circulation message board ("Screw you, Regulation FD!") we were treated to a double header --triple header, if you count the Reg. FD defiance:

1. Byrne told a whopper of a lie, and

2. He made it perfectly plain that had concealed significant facts in its 8-K disclosing the resignation of director Ray Groves.

Let's deal with these one at a time.

In response to a question asking "how much is paid to private dicks" in relation to his naked-shorting jihad, Byrne responded:

Unusually for Byrne, this answer is clear, unambiguous, and unhedged. Forensic accountant Tracy Coenen's observation that "Byrne never has a straight answer for anything" certainly did not apply in this instance. Note that the answer is unequivocal. It doesn't apply just to the "naked shorting jihad" but all situations. "I DON'T USE PRIVATE EYES." Just security firms for "physical security."

Only problem is that it is a flat-out lie. In fact, it is such a blatant, easily verifiable lie that I really am beginning to wonder whether Byrne can distinguish between fact and fancy. Or maybe he expects that the wage slaves at the SEC, which is investigating and has subpoenaed Byrne and Overstock, are going to ignore his lies because of all the money he gives to the Republican Party.

Byrne forgot that had been dragged into a mess involving an unscrupulous private detective named Michal Lair, who was sentenced to 27 months in prison for ripping off a bunch of high-profile clients--among them, Here's a Wall Street Journal law blog item laying out what happened.

According to the notice of Judgment in Lair's criminal case, -- not some outside lawyer, but the company itself -- paid Lair $50,000 in April of 2006.

Overstock appeared in the list of idiot "victims" who were ripped off by a grand total of $307,103.50. Lair is required to pay back every penny of that sum.

Although the indictment refers to "an attorney for an internet services company involved in a high-profile litigation with hedge funds," that "attorney" was not an outside law firm, but Overstock's in-house lawyer, Jonathan Johnson.

So Byrne cannot claim that an "outside firm" hired this loathsome gumshoe and he is shocked, shocked! to learn that it happened. Particularly since Overstock's involvement with this private detective was widely reported at the time.

What makes Overstock stand out in the papers is that not only was this chronic money-loser one of the few non-law firms to be ripped off by this rogue private eye, but Overstock was also his biggest customer.

It's not clear precisely what dirt Lair promised to dig up for Overstock, but a fellow client was the drug company Biovail, indicating that Overstock's junk lawsuit against Gradient Analytics was the subject of the private detective's attention. Biovail, a fellow SEC-investigatee, and Overstock filed similar blame-shifting lawsuits against Gradient and others, claiming that nefarious market forces and not their own ineptitude were to blame for the companies' woes.

Evidently Overstock must have appealed to him as far dumber than Biovail's law firm, which just paid $4,030. Another reputed victim of rapacious short-selling, Net2Phone, paid $10,000.

The Journal blog reported at the time:

Prosecutors alleged that Lair approached lawyers claiming to have incriminating information that could help their clients’ cases. He would demand payments upfront and then failed to produce the information, prosecutors said.

“He flimflammed some pretty sophisticated outfits,” Judge Keenan said.

With one exception, apparently.

Moving on to No. 2:

Last week, Overstock reported the resignation of a member of its Audit Committee, Ray Groves. As I observed last week, Groves resigned in a brief letter saying, "My resignation relates to the Company’s prime broker suit" -- something not disclosed in Overstock's press release announcing the resignation.

As I pointed out last week, it seemed odd that Groves is resigning now over a junk lawsuit (separate from the Gradient lawsuit I mentioned earlier) that was filed in early February. Another director quit on that same issue in February.

I asked, "Are there other disagreements that have not been disclosed?"

The same question was asked of Byrne on IV. The exchange went like this:

Other than the prime broker stuff, was Ray upset about anything related to Overstock or you? Why did he quit now? What happened since February to make him quit?

Again, Byrne makes perfectly plain that this director was indeed upset about Overstock and Byrne -- contradicting a previous answer that there were no material disagreements with him.

Moreover, as Sam Antar points out, SEC rules require that companies disclose all "such issues" and not keep them in some boardroom Cone of Silence. The relevant passage is item 5.02:

(a)(1) If a director has resigned or refuses to stand for re-election to the board of directors since the date of the last annual meeting of shareholders because of a disagreement with the registrant, known to an executive officer of the registrant, as defined in 17 CFR 240.3b-7, on any matter relating to the registrant’s operations, policies or practices, or if a director has been removed for cause from the board of directors, disclose the following information;

(iii) a brief description of the circumstances representing the disagreement that the registrant believes caused, in whole or in part, the director’s resignation, refusal to stand for re-election or removal. [emphasis added]
In other words, Overstock can't just cherry-pick the reasons that are least embarrassing and leave the rest, the ones that make the CEO look like a jerk, concealed from shareholders and left in the "privacy of the boardroom."

I think Tracy Coenen put it best in her latest post on : "Is the house of cards finally falling down?"

There's a lot more to be said about Byrne's latest jaw-flapping -- such as his denying he knows the identity of Phil Saunders a/k/a "Bob O'Brien," despite having brought Saunders to a meeting with the media in 2005 -- but that should do for now. I'll update this item as developments warrant, so watch this space.

UPDATES: John Carney of Dealbreaker sums up the mess:

Against all odds, the story of Overstock continues to get worse. The company has been a laughing stock to almost anyone who can be bothered to think about it anymore. It’s the focus of an SEC investigation. I is run by a chief executive whose name—Patrick Byrne—long ago became synonymous with wacky conspiracy theories. It regularly deploys nasty tactics to defame reporters who dare mention its deterioration. [And] it’s bleeding directors. . .

[Groves] was, in the eyes of some observers, the last and best hope the company had to maintaining a sense of credibility. His departure comes as only the latest of a series of resignations by board members. The past year has seen also seen departures by directors John Fisher and John Byrne, the CEO’s father. When your father bails on your company, you know you are in trouble. Or rather, you would know. Patrick Byrne seems to think it’s a sign of his companies strength. Or something. We’ve long ago given up trying to figure out anything about what goes on inside of Byrne-the-younger’s brain.
John concludes: "The sailors are scurrying for the life-rafts even as a wet-kneed Captain Byrne continues to shout orders to man the guns against the naked short sellers that no-one but him can see."

Sam Antar's blog has thought-provoking open letter to the surviving members of the audit committee. This was evidently emailed to them, so they cannot claim not having received it. And if I were them, I would pay careful attention to what it says.

Here's a paragraph that they should read very carefully:

It is possible that actions by certain employees of violate the company's Code of Business Conduct and Ethics. It appears that such possible violations of’s Code of Business Conduct and Ethics may have been executed with the approval and/or endorsement of one or more of the company's Senior Financial Officers (as defined by its Code) and may be construed by the Securities and Exchange Commission as an ethics violation by such officers. If it is determined that you failed to act on possible material ethics violations by Senior Financial Officers of the company, there may be disclosure issues with the Securities and Exchange Commission.

... which brings to mind another issue that I have seen raised. Does maintain sufficient D&O (directors and officers) insurance for its board members? In the past, directors have had to pay significant out-of-pocket sums when presiding over corporate train wrecks--$25 million in the case of Worldcom.

You really have to wonder who is in his or her right mind would serve as a director of this corporate chamber pot, even if getting ironclad guarantees that there is sufficient insurance to guard against the inevitable day of reckoning.

That raises yet another question: What insurer would be nutty enough to write D&O insurance for

O-Smear, meanwhile, hits the nail on the head in a post calling Byrne the Paris Hilton of Corporate America. "That's what you get when you add unlimited funds to a "rules and regulations are for the little people" attitude." It's a must-read analysis of Byrne's doubletalk and amoral conduct.

© 2007 Gary Weiss. All rights reserved.


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

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Friday, May 25, 2007

Will the Last Director Please Turn Out the Lights?

The train wreck appears to be progressing faster than I had expected, and, as usual, CEO Patrick Byrne's nutty behavior is the catalyst.

Last night, the company announced the resignation of Ray Groves, a member of its board of directors audit committee and one of two "financial experts" on the board. The announcement did not mention the reason, which Groves disclosed in an SEC filing -- "My resignation relates to the Company’s prime broker suit."

Here's Sam Antar's and Herb Greenberg's take on the situation, and a good column by Seth Jayson. The stock tanked in reaction to the news. Herb observes: "Interesting to note that in its official press release, Overstock didn't mention the official reason, instead leaving it to an SEC filing on the day before a three-day weekend." Yeah. You'd think he didn't want people to notice, or something.

The "prime broker suit" is, of course, the moronic junk lawsuit that Byrne filed against half of Wall Street just before announcing fourth-quarter earnings, in a crass attempt to divert attention from the Niagara Falls of red ink.

This is now the third board member to quit because of Byrne's nutty antics.

The first was his father, insurance magnate John Byrne, who was chairman of the company. He quit after an embarrassing falling-out over Byrne's anti-naked-shorting "jihad." As I and others observed at the time, the elder Byrne's departure was a mockery of corporate governance, because a responsible board chairman would have forced a bizarre and delusional CEO's departure, and not just slinked away.

The second board member to leave because of Byrne's craziness was John A. Fisher, who like Groves was a member of the audit committee and who also quit because of the prime broker suit.

More recently, another audit committee member, Allison Abraham, dumped 15,000 shares of the stock. A real vote of confidence, that.

Now, this being, the Groves question raises regulatory questions. Among them: Is that the only reason Groves (and, for that matter, Fisher and the elder Byrne) resigned?

And why is Groves resigning now over a lawsuit filed in early February? Fisher quit in March.

Are there other disagreements that have not been disclosed?

And why wasn't the reason for Groves's resignation disclosed in the press release?

Remember that Hewlett-Packard recently was penalized by the SEC for not providing a full disclosure of the reasons for a board member resigning.

It is interesting, I think, that the two board members who have left -- supposedly solely because they don't like the lawsuit -- were both on the audit committee. This company is under SEC investigation, and one of the subjects of its subpoeanas to the company and Byrne is its accounting practices. Sam Antar has, additionally, raised many serious questions concerning the company's accounting, particularly for inventories, on his blog. I understand that accounting practices are a central focus of the SEC's investigation.

As usual when bad news is about to hit the headlines, Byrne dispatched his in-house cyberstalker, the newly promoted director of communications (and official corporate spokesperson) Judd Bagley, to produce a diversion on the corporate smear site. It appeared on ASM early this morning, and was announced by Gagley (sorry, I wrote that while gagging) on the Investor Village message board shortly after 6 a.m., Eastern time, today.

This one claims mysterious "emails" asserting a closeasthis relationship between myself and the hated Depository Trust and Clearing Corp., the Wall Street back office operation that is a subject of a junk-lawsuit campaign by the naked shorting nutcases.

Bagley also drags in Roddy Boyd of the New York Post, who clearly terrifies Byrne. Boyd was the subject of Bagley's last smear. With the Boyd smear, now has a 100% track record on the media -- it now has published lies about every single reporter who has written negatively about Overstock, via smears from surrogates like Bagley and directly from Byrne.

My favorite part of the ASM post is the last line: ". . . a disturbing picture of that organization’s policy of defamatory, surrogate-driven, scorched earth public relations is beginning to emerge."

Note that the nauseating Bagley precisely describes himself and his own job at, in the context of lies directed at innocent people. The term "surrogate-driven," of course, describes Byrne's own use of surrogates such as Phil Saunders, a/k/a "Bob O'Brien," to smear critics and members of the media.

Byrne's and Bagley's habit of projecting on others their own sleaziness will make for an interesting study in abnormal psychology after this is all over, and is just a foul memory.

Speaking of which, I think a test of the SEC's credibility will be the extent to which it includes this nightcrawler in its future and Byrne-related enforcement actions. Surely those fabricated "emails," if they exist, should be promptly subpoeanaed by the SEC.

Yes, I realize that's accounting practices are the focus of regulatory scrutiny. But its systematic violations of corporate ethics -- via the employment of at least one full-time cyberstalker and smear peddler -- surely deserve appropriate sanctions.

© 2007 Gary Weiss. All rights reserved.


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

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Tuesday, May 22, 2007

Tales From Fantasyland

As a change of pace, I thought it might be a nice idea to run through the latest DVD releases and toss in a little more from the wonderful world of fantasy and imagination.

A new box set of Gary Cooper movies is coming on DVD, according to the New York Times. Let's see... oh, according to the AP, a musical version of The Addams Family will be coming out soon.

What else have we got? Hmmm. . . oh, here we go. CEO Patrick Byrne shared with us his latest paranoid fantasy on the Investor Village message board. Seems that Barron's financial weekly is taking its marching orders from a web of international criminals. Oh my goodness!

What touched off this latest in a spate of bizarre, nutty rants from "Sith Lord" Byrne is a routine article in Barron's. This is apparently what set him off on a rampage:

Prior to the 9/11 attack on the World Trade Center and Pentagon, suspicious trading of puts was spotted in American and United airlines. There was similarly suspicious trading in Europe in insurance-company stocks. U.S. intelligence agencies determined that portfolio managers coincidentally initiated the trades before al Qaeda's attack.
No! No! It was a conspiracy of naked short sellers! Obviously Barron's was under instructions to hide the truth! Said Byrne:

"INSTRUCTIONS: You are to write an article about criminals manipulating stock markets on an international scale. However, under no circumstances will you mention 'naked shorting' or even 'shorting.' Instead, refer to 'puts,' even if you have to write some terribly awkward sentence. . .
So what you have is another of a long line of conspiracies at work, this one preventing Barron's from revealing the truth -- a criminal conspiracy to naked-short stocks ahead of the attacks.

No matter that there was no calculated trading in advance of 9-11, as Alexander Rose pointed out in a definitive National Review article a few years ago. This is, after all, a drama being carried out in Byrne's mind, not the real world.

In his somewhat scary, unsigned reverie, Byrne -- posting as "Hannibal" (Reg. FD be damned) -- reflects as follows:

Really wild.

"First they laugh at you. Then they fight you. Then you win. Then they circumlocute."
Not exactly. The real-world procedure is "First you make a damn fool of yourself. Then they ridicule you. Then the board of directors fires you." I expect that Byrne's latest "please fire me" cry for help will go unanswered by his lapdog board of directors, as usual.

I wonder if Byrne's bizarre, paranoid message board posts are known to the political figures Byrne has been courting via his massive campaign contributions? Byrne is known for his right-wing posturing and support of causes like school vouchers, but posting nutty rants on message boards is his true passion.

© 2007 Gary Weiss. All rights reserved.

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

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Monday, May 21, 2007

The Baloney Brigade Gets a New Recruit

Happy day! The anti-naked-shorting loons have a valuable new recruit to pump their discredited cause -- a far-right, Holocaust-denying, Jew-baiting, conspiracy-mongering wingnut by the name of Daryl Bradford Smith.

A reader points out that Smith has lately been promoting the baloney cause, and touted one of Patrick Byrne's more moronic interviews, in his website It's right there on the front page, next to a "Jewish ritual murder" rant and the latest JFK conspiracy theories.

Smith is widely known in tinfoil hat circles and is on the farthest fringes of the conspiracy circuit, as you can see from the collection of trash on his website. He blames "Zionists" for 9-11 and asserts that the Apollo moon landings and the Holocaust never happened. All a conspiracy, you see. "They" are to blame.

A massive "stock market conspiracy" is right up his alley!

Not surprising that this kind of creature is crawling into the big Baloney tent. Judging from my emails, fringe characters and bigots stand tall among the ranks of the anti-shorting nuts. My favorite is the idiot who posts obscene rants as comments to my blog, and then whines on message boards about "censorship" when I delete them.

Bigotry among the stock market conspiracy nuts is a well-established phenomenon. Blogger and investor Jeff Matthews first wrote about it in posts such as this one over a year and a half ago, resulting in vicious attacks against him by Phil Saunders a/k/a "Bob O'Brien," who handled the job of anonymously smearing Byrne's critics until the job was taken in-house by Judd Bagley. (Speaking of which, I wonder if the SEC is probing Byrne's links to, and possible compensation arrangements with, the kooky Saunders?)

Hey, I don't blame the balonies for their infatuation with far-out causes. You know the old candy commercial -- sometimes you feel like nut, sometimes you don't. These mutts feel like a nut all the time, and for obvious reasons.

© 2007 Gary Weiss. All rights reserved.


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

Labels:'s Ethical Dilemma

Using "ethics" in the same sentence as the corporate chamber pot "" is inherently absurd, I know. But one of the pitfalls of post-Enron reforms -- if you're a slippery, blame-shifting, critic-smearing CEO like Overstock's Patrick Byrne -- is that unethical conduct may not just be morally repugnant. It may fall afoul of the securities laws.

Reformed felon and ace fraud-fighter Sam Antar raised that troublesome issue in two insightful blog items over the past few days. They can be found here and here.

The first post points to a line from the Overstock code of ethics (yes, amazingly enough. it has one; you can download a copy here), saying:

"Business records and communications often become public, and we should avoid exaggeration, derogatory remarks, guess work, or inappropriate characterizations of people and companies that can be misunderstood. This applies equally to e-mail, internal memos, and formal reports…. In accordance with these policies, in the event of litigation or governmental investigation please consult with the company’s General Counsel."

Antar, as usual, makes his point in the form of sharp questions -- the same questions that he used to ask Byrne directly on Byrne's favorite message board, until Byrne's minions had him kicked off:

Have your actions been in complete compliance with the above provisions?
Have you avoided exaggeration?
Have you avoided derogatory remarks?
Have you avoided guess work?
Have you avoided inappropriate characterizations of people and companies that can be misunderstood?
When you received your SEC subpoena, did you promptly inform the Company’s General Counsel?
When you received your SEC subpoena, did either you or the company’s general counsel promptly inform’s Audit Committee?

Well, it's pretty obvious to anyone who has followed Byrne's communications with the public (click on the Patrick Byrne tag below) to know that they are a mountain of calumnies, exaggerations, innuendo, evasions and -- as I have personally experienced -- outright fabrications. As forensic accountant Tracy Coenen recently observed: "Why CEO Patrick Byrne never has a straight answer for anything is beyond me. And I’d be curious to know just how many people really believe anything that comes out of his mouth (or in this case his fingers on the keyboard)???"

Only last weekend, "Baghdad Byrne" posted a ludicrous series of nutty, evasive message board posts to slip-slide around his year-late disclosure of an SEC subpoena.

Another example of Byrne in full-dissemble mode was the line of swill that he fed Herb Greenberg in emails last June. Here's Herb's blog item at the time.

As you can see, Herb asked a simple question -- was Overstock in any way associated with the testimony of a witness before the Senate Judiciary Committee? Herb knew perfectly well the answer, which was "yes," as evidenced by the signature on the Microsoft Word document, which indicated that his testimony was drafted on an computer. Byrne's response was almost comical in its evasiveness and dishonesty.

Now, what's wrong with a CEO engaging in "exaggeration, derogatory remarks, guess work, or inappropriate characterizations of people and companies"? The problem is that, unless given a waiver from the code of ethics by the board of directors, the company has a potentially nettlesome securities law issue when the SEC comes calling -- as it has with Overstock and Byrne personally.

Thus we have Sam's follow up questions in the next post, which concern waivers and amendments to a company's code of ethics.

As usual, Sam is hitting the nail on the head, and I hope that his considerable following in the regulatory community is paying attention.

Another useful post from the Overstock beat can be found in the O-Smear blog, which points to the recent disappearance of message board postings by Overstock's resident stalker, its newly appointed director of communications Judd Bagley.

Despite being appointed the company's chief flack, Bagley continues to harass and stalk critics of Byrne and Overstock without disclosing his identity and corporate affiliation with each post. Indeed, as noted by O-Smear, Bagley in one post actually made fun of Regulation FD. In that now-deleted post he admitted to being a Yahoo screen name that has recommended purchase of Overstock shares.

I wonder how the SEC feels about a company official recommending purchase of a stock without identifying that he or she is a company official?

I wonder if the SEC takes the same flip view of FD as Overstock's director of communications? I wonder how SEC enforcement officials feel about a corporate official making fun of FD in a post that, by using a pseudonym, itself thumbs its nose at FD?

O-Smear points out that this very recent Bagley post mysteriously vanished. Note too the updated post referenced at the end, which points to the recent disappearance of other pseudonymous Yahoo posts by Bagley -- all harassing and stalking critics of Overstock -- some several months after they were posted.

Makes you wonder why Yahoo would suddenly take such an action, all of a sudden.

Is Bagley trying to cover his tracks and, if so, why? Yahoo allows users to remove posts by filling out a form. I am told by a person familiar with its procedures that if Yahoo removes a post at a user's request, it usually deletes every post that person has made.

If so that would be futile, as all of his deleted Yahoo posts are available to regulators and have long since been archived by Internet sleuths. So did Yahoo act on its own, and, if so, why? Is this the result of an SEC query?

UPDATE: Note the comment from one reader, who makes some good observations that I think are worth repeating:
In addition to the Reg FD troubles, there is also appears to be Sarbanes-Oxley component to Overstock's failure to enforce these policies.

Individually, one would react to any one of these infractions as a minor matter that does not rise to the level of active regulatory enforcement. However, the volume of infraction, and the manner of execution in this case is quite remarkable, and does rise to actionable violation in my opinion. And if my opinion turns out to be fact, then the SEC’s credibility is on the line if they opt to do nothing.

I would still like to know if the Overstock Sr. Human Resources executive reported these policy violations directly to the Board of Directors, as many - if not most - public company now require in a post-Sarbanes world.

As we all know, the failure of the Board of Directors of, Inc. at Corporate Governance is no less egregious than it’s rogue CEO and his minions.
Also, O-Smear's proprietor points out to me that Bagley's mid-May post under a pseudonym, the one in which he makes fun of Regulation FD, makes a reference to himself as "director of so--" -- that is, his old title of director of social media.

Bagley was actually director of communications at the time, only it was not widely disseminated.

Why the deception? Could it be that Bagley is so accustomed to telling lies that he can't distinguish them from the truth?

© 2007 Gary Weiss. All right reserved.


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

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The Problem With Discharging Wolfowitz

To no great surprise, Paul Wolfowitz was stiff-armed out of his job as president of the World Bank on Thursday. The New York Times today has an op-ed by Christopher Burnham describing a victim of his departure -- the bank's anti-corruption drive.

Burnham, who was under secretary for management at the United Nations, contrasts the anti-corruption campaign at the bank with the investigation of the oil-for-food scandal at the UN:

New reforms proposed by Secretary General Kofi Annan and his successor, Ban Ki-moon, await approval from the General Assembly. Why hasn’t more been done? Claims of politicization — a common excuse for inaction — have prevented the organization from making all the changes it should.

My fear is that a reform agenda at the World Bank, absent Mr. Wolfowitz, faces a similar fate. . . .

One of the key reasons the oil-for-food scandal occurred was because the investigations division of the United Nations’ oversight office was undermined in the past by pathetic management and lack of staff. This is a mistake the World Bank needs to avoid. A rigorous independent investigations office is critical.

Even more crucial is a chief executive who will continue to fight corruption just as vigorously as Wolfowitz, but without the political baggage that made him dead meat. A good choice may be Paul Volcker, whose investigation of the oil-for-food scandal was lauded for its thoroughness.

© 2007 Gary Weiss. All rights reserved.


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

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Friday, May 18, 2007

The Fallacy of Catering to Shareholders

In my Salon essay on the Rupert Murdoch takeover bid for Dow Jones, the central thrust of my argument was that public ownership has not been good for the newspaper business. I point out several examples of how the philosophy of "maximizing shareholder value" has laid waste to a host of fine newspapers.

The current issue of Business Week has a guest essay (subscription required) entitled "Put Investors in Their Place" that takes this idea one step further. The authors are Clayton M. Christensen, a professor at Harvard Business School, and Scott D. Anthony, president of a consulting firm called Innosight.

The notion that managers must above all appease investors drives behavior that focuses exclusively on quarterly results. Thus, many management teams hesitate to invest in promising innovations that are likely to hurt near-term financial performance. As a consequence, leaders in industries facing disruptive change—such as grocery retailing and newspapers—lose both direction and strength as they try to figure out what kind of shareholder value they should create.
I don't know about grocery retailing, but that certainly has been true in newspapers.

The problem, they argue, boils down to the fact that most shareholders own stocks, on average, for less than ten months -- down from five years or more in the 1960s.

Christensen and Anthony observe:

Perhaps it is time for companies to adjust the paradigm of management responsibility: "You are investors and speculators, not shareholders, and you temporarily find yourselves holding the securities of our company. You are responsible for maximizing the returns on your investments. Our responsibility is to maximize the long-term value of this company. We will therefore act in the interest of those whose interests coincide with our long-term prospects, namely employees, customers, the communities in which our employees live, and the minority of investors who plan to hold our securities for several years."

This is, I think, a thought-provoking and valuable essay.

© 2007 Gary Weiss. All rights reserved.


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

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Wednesday, May 16, 2007

Farewell to a Corporate Blame-Shifter

One of the great blame-shifters of the corporate world is gliding off into the sunset. His name is Eugene Melnyk, and he runs a dodgy little Canadian drug company called Biovail. Melnyk will be packing up his things and retiring as CEO as of June 30, the AP reports.

Isn't that terrible? I was so getting used to reading about this company's most famous products: the junk lawsuits that it files to suppress negative information in the marketplace.

The first, which it filed against a short-seller back in the 1990s, went nowhere and was dropped.

The latest was filed in February 2006 (here's a company handout announcing the glorious thing) and was filed against villainous hedge funds and independent analysts. You know -- the guys who have the audacity to think that Biovail is a piece of cow dung? The famous train wreck filed a similar suit several months earlier.

The second lawsuit got him a certain amount of sympathetic attention from the media, including a spectacularly naive 60 Minutes segment. That report was so awful that it didn't even mention his 1990s lawsuit, which was filed against a shorts-seller and was similar to the second suit he filed.

Either Biovail is a victim, as Melnyk has asserted, or a piece of cow dung, as the analysts and short-sellers allege. Which is right? Well, "dung" seems to be winning, hands down.

The SEC the other day filed a Wells Notice, which means that it is about to file charges against the company and Melnyk personally. The U.S. Attorney's office in Brooklyn is also investigating. Joe Nocera had an update in his Saturday New York Times column (the one that sent Patrick Byrne bouncing off the walls last weekend).

Hence the entirely coincidental retirement.

As you can see from Joe's column, junk litigation works. It got Banc of America Securities to drop its analyst coverage of Biovail. Thus the company was able to achieve its aims by simply filing the lawsuit and not proving a thing.

Isn't that terrific? After Enron, tough analyst coverage was supposed to be the aim of all red-blooded Americans. But now we know how that was all just a lot of bull. Analysts are supposed to write glorified press releases, showering praise on inept CEOs like Melnyk and Byrne.

So bon voyage, Eugene Melnyk! You'll be missed. But there are plenty of incompetent CEOs following in your footsteps. Blame-shifting has been all the rage for some time, and the SEC is only just catching up.

P.S. I wonder if 60 Minutes is going to do a follow-up if and when the SEC files charges?

© 2007 Gary Weiss. All rights reserved.


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

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Tuesday, May 15, 2007

Judd Bagley Hears His Master's Voice

I'm practically gagging on this tiresome subject, but here we have yet another lurid story sliming its way out of the wild and wacky world of CEO Patrick Byrne.

Fans of the old Lassie TV series will appreciate this: it is the story of a CEO, and the lapdog that loves him.

In a message board post yesterday afternoon, Byrne mentioned in passing that he had been asked to comment upon something by a terrific New York Post financial reporter, Roddy Boyd. Roddy, you may recall, wrote an article the other day on Byrne delaying for one year his disclosure of a subpoena.

Obviously Roddy Boyd is not on Byrne's list of favorite people. In fact, having just written an article unfavorable to Byrne, and at work on yet another, he is No. 1 on the hit parade.

And then..... look what we have here!

Later that same day,'s stalker-in-residence, the nauseating Judd Bagley, announced a brand new post on Overstock's antisocialmedia corporate smear site, which he operates.

The subject of the smear site's latest overheated fantasies is none other than New York Post reporter Roddy Boyd!

Byrne had spoken, and his lapdog was on the case. Boyd was not one of Bagley's favorite people either, because it was his Jan. 2 article in the Post that exposed Bagley as the operator of the then-anonymous antisocialmedia smear site. That ruined Bagley's careful efforts, such as an anonymous registration, to keep the site anonymous. Bagley and Byrne constantly issued dishonest and misleading public pronouncements seeking to hide Bagley's involvement.

All this would be funny if it wasn't so creepy -- and if this did not involve a public company that is a grotesque parody of corporate ethics.

However, one thing you have to admit is that this stomach-wrenching toady has been doing an excellent job stalking and and spreading fabrications about Patrick Byrne's enemies! I just learned -- and this has not been picked up anywhere -- that Byrne has recognized Bagley for his excellent performance as his personal lapdog by promoting Bagley to the position of "director of communications."

The former "director of social media" of a company that has no social media is now "director of communications" of a company that "communicates" by rambling, unsigned posts in message boards, and by maintaining a unique astroturfing smear site.

It was never announced -- which is odd for someone moving to such a visible position -- but instead was tucked away in an Overstock conference handout here. As you can see, he was elevated to his job sometime before April 30.

Note the typical Bagley lie in the handout. He was not "speechwriter and press secretary for then-Governor of Florida Jeb Bush." He worked for a minor commissioner, Cynthia Henderson, head of the Department of Business and Professional Affairs. Bagley's major achievement there was a smear campaign against a Tampa reporter who wrote tough stories about Henderson, as reported in a previous item.

Hey, you've got to admit that Bagley has worked hard for his position. Not every company has a full-time cyberstalker, and Bagley had filled that position admirably, making him richly deserving of promotion.

Besides, with all the SEC scrutiny and all, I suppose it was time that Byrne gave Bagley actual responsibilities at the company apart from running the corporate smear site. However, this assumes he does have responsibilities other than running the smear site. This is and not a normal company, after all. A normal company would not only disavow such a site, but would have fired its proprietor. This being Overstock, the stalker is encouraged and promoted.

You have to admit, not every "director of communications" has done such an excellent job of getting miserably poor media coverage, with more bad coverage coming every day! His attack on the integrity of Roddy Boyd will certainly add to his reputation as a kind of one-man corporate press-enraging mechanism.

Another nice thing about his promotion is that the SEC now has a much higher-visibility target in its investigation of Byrne's misconduct, as well as securities law and ethical lapses at Overstock in general. I understand that the company's accounting practices are a particularly serious focus of the SEC's attention.

This elevation means that from the date of his employment as "communications director," whenever that was, all of his many antisocialmedia and message board posts have -- more than ever before -- the official imprimatur of He certainly was speaking for Overstock on the boards before his promotion, but this underlines the official character of his Internet activities.

It means a bunch of other things that I'll be describing in future blog posts.

So let's break out the champagne and toast an upward move for one of Corporate America's most truly loathsome characters.

Oh, and I know a perfect gift to give Bagley in recognition of his crawl up the corporate ladder: a framed copy of's Code of Ethics.

UPDATE: An interesting coda involving the Investor Village message board, which has become an extension of the cyberstalking apparatus.

After Bagley's post appeared on the Investor Village message board, a user posted two message containing personal details about Bagley and his family. Those messages were almost instantaneously deleted -- in contrast to the dozens of cyberstalking messages posted on the IV board by Bagley and others, may of which are obscene or threatening in nature. One, containing a death threat against me, is still there.

IV has also kicked off critics of Bagley and Byrne, notably felon-turned-corporate whistleblower Sam Antar, as I've previously pointed out.

© 2007 Gary Weiss. All rights reserved.


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

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Sunday, May 13, 2007

Baghdad Byrne's Weekend Delusion-a-thon

Updated Monday, May 14

More on the continuing adventures of CEO Patrick Byrne, whose paranoid fantasies and lengthy, self-incriminating message board rants are a fascinating spectacle. His increasingly surreal statements brought back fond memories of Baghdad Bob, the famously delusional Iraqi information minister.

In our last installment, I described how Byrne's "forgetting" to report an SEC subpoena for a year might have been more than just an omission, but a misstatement.

Most CEOs would hold their peace in such a situation. But Baghdad Byrne continued to dig into the topsoil with his tongue, as he continued his verbosity to investors asking a simple question: Why did he wait a year before disclosing his subpoena? It was a fascinating example of a slippery CEO refusing to tell the truth.

Byrne began the weekend mouth-fest by bouncing off the walls on the Investor Village message boards Friday night, reacting to questions from Joe Nocera, who wrote an excellent column in the New York Times Saturday morning.

If you comb through the muck you will note that Byrne's central complaint against the Times was bogus. He was given hours of time to respond to Joe's simple query about the SEC investigation of Overstock, but refused to do so -- because, no doubt, he knew his spin would not work with perceptive Nocera. This Internet addict's "didn't check my emails" excuse will go down in the pantheon of unbelievable Overstock excuses, right alongside "cow in the highway."

Completing the surreal scene was Byrne's loyal factotum, resident stalker Judd Bagley, who threatened a critic -- Internet sleuth "ScipioAfricanus" -- with "exposure." So I guess you can expect the Overstock's smear site to be cranking up some fairy tales fairly soon.

Byrne and the nauseating Bagley continued to thumb their noses at Reg. FD and public company disclosure norms by posting under Internet "handles" and not disclosing their identity and corporate affiliation with each post. (Not that it would necessarily make much difference. I think that their posting on a message board raises securities law issues even if they did identify themselves properly.)

Byrne's hysterical and largely incoherent post, "Gotterdammerung of the American mainstream media," predictably tosses Nocera into the ever-widening media conspiracy. But that's not as noteworthy as his desperate effort at damage control over the delayed disclosure of the subpoena.

Byrne's latest spin (repeated the following day) is that the subpoena "was a small fraction as long as the first, covered sub-issues of the first, as well as issues related to a broader investigation that is not about me or Overstock at all."

But that's not what the company's recent 10-Q said. The 10-Q doesn't say Byrne was subpoenaed on an investigation unrelated to Overstock or Byrne. In fact, subpoenas do not disclose, as a rule, the purpose of the investigation -- they just ask for stuff. Still if Overstock knew that the purpose of the two subpoenas was different, why didn't it say so? What possible reason would it have not to say so?

As you can see, the first quarter 10-Q said that both subpoenas requested the same things:

These subpoenas [emphasis added] requested a broad range of documents, including, among other documents, all documents relating to the Company’s accounting policies, the Company’s targets, projections or estimates related to financial performance, the Company’s recent restatement of its financial statements, the filing of its complaint against Gradient Analytics, Inc., the development and implementation of certain new technology systems and disclosures of progress and problems with those systems, communications with and regarding investment analysts, communications regarding shareholders who did not receive the Company’s proxy statement in April 2006, communications with certain shareholders, and communications regarding short selling, naked short selling, purchases and sales of Company stock, obtaining paper certificates, and stock loan or borrow of Company shares.
There can be only two reasons for this discrepancy:

1. The person who signed the 10-Q, Overstock CFO David Chichester, works secretly for the Sith Lord, so he sneaked in this materially misleading language, omitted the exculpatory information to make his boss look bad, and Byrne was too busy posting on message boards and looking for dead bodies in his trunk to notice;


2. Byrne is telling one whopper of a fib, seeking to mislead and distort by claiming that the Overstock subpoena is materially different from the Byrne subpoena.

Once again we have the "Groucho Marx challenge": What are you going to believe, Patrick Byrne or your own two eyes?

My challenge is this: What's the SEC going to do about it?

Ace forensic accounting sleuth Tracy Coenen observes:

Did you catch that? He’s claiming that his subpoena wasn’t related to the SEC investigation. That will be his reason/excuse for not disclosing it in Overstock’s Prospectus and SEC filings.

Patrick Byrne may also claim that since the subpoena was to him personally, and the Prospectus and 10-K both apply to the company, then there’s no violation or lie.

The cool thing is that neither of these excuses really pans out for Byrne. The company has now disclosed the subpoena, so to say that “previously it wasn’t related to the Overstock investigation but now we’re disclosing it… ” Well, you get the idea.

The Patrick Byrne mouth-a-thon continued into Sunday, with Byrne continuing to push the "Groucho Marx challenge" in a series of ever-lengthier, ever-loonier rants. Note this pile of pretentious, dishonest mush, and this post repeating and amplifying the "Groucho Marx challenge" I noted earlier.

He also seems in intent on pushing the line that the SEC is aiming at a broad, widespread conspiracy and Byrne is just a cooperating witness. If he was, of course, they wouldn't be issuing a subpoena, and his famous "celebration" press release (below) had already indicated that the SEC's interest was largely hostile. Note the admission that "Some of the requests suggest the whispering of the blackguards, but I remain unconcerned about their hokum."

"Blackguards" is Byrnespeak for "critics who have made credible, well-documented assertions concerning me and my company." It ain't "hokum," of course, and Byrne certainly seems concerned. Indeed, terrified.

That's one of a number of contradictions and lies that oozed from Byrne's weekend ravings, which I am sure will be giving the SEC and other Overstock-watchers plenty of grist for their investigations.

Hopefully for Coenen, Sam Antar, the media, the SEC and everyone else following this story and toting up his lies and evasions, Byrne will continue to keep his tongue primed and ready for deployment. As hole-digging equipment it is a remarkable instrument.

Felon-turned-crimefighter Sam Antar observes that back on January 30 he asked Byrne on the Investor Village message board if "the Board of Directors considered any additional disclosure relating to the SEC subpoena of" Byrne's response was an evasive, abusive brushoff, and Byrne's minions later had Antar booted off the board.

Meanwhile, forensic accounting whiz Tracy Coenen is dazed and amazed by Byrne's weekend obfuscations:

So now, Byrne is claiming that the May 9 press release about the company’s subpoena really included his personal subpoena, even though he didn’t actually disclose that and the subpoena hadn’t even been issued yet. That might wash with some people, but not with me.

He now disclosed the personal subpoena separately, so he must believe that it has some significance and requires disclosure. Either it needs to be disclosed or it doesn’t, but Patrick seems to be saying that it didn’t need to be disclosed separately a year ago, and this year it does. Nonsense.

But you see, Tracy, you're making the same mistake I've sometimes made. Byrne is not taken seriously, and I think that somewhere deep down he does not expect to be taken seriously. As a child of ancestral wealth, he has never had to work for a living and expects to coast for the remainder of his life on the paternal nest egg, no matter how much wreckage he causes.

Hey, they don't call him the Baghdad Bob of CEOs for nothing!

UPDATE: An alleged Overstock insider posted anonymously on the Investor Village message board Sunday night, claiming that Byrne concealed his subpoena from the board of directors and was eventually forced to act by the SEC. If not a hoax, this could be devastating. Here's Tracy Coenen's post posing two additional questions for Byrne.

The alleged insider says:

All was good in the world as the SEC careful examined the evidence provided, until the SEC pronounced that one of the CEO's targets was without fault, Gradient/Camelback Research. This infuriated the CEO and he made mention of the 2nd subpoena to one to many persons. The word leaked to the Board of Directors via a variety of sources, including Sam Antar. The CEO was called on the carpet but he basically told the board to go F themselves, he wasn't disclosing a 2nd time. One member of the board of directors then resigned.

The SEC then pushed the issue and the board was forced to act, under legal advice, to disclose the 2nd subpoena in the latest 10Q. Patrick as royally pissed off and remains pissed off to this day.

He refuses to admit anything improper was done and it is now a firing offense at to mention the 2nd subpoena.

But if this account is correct, why didn't the board of directors resign en masse? It doesn't seem plausible that even the most pliable corporate board would accept such misconduct from a CEO without quitting -- and the Overstock board is arguably the most pliable in Corporate America.

Another interesting weekend discovery was made by Internet sleuth "ScipioAfricanus." He found that a Utah entity called Provo Labs is monitoring traffic to antisocialmedia. Provo Labs, which describes itself as "an incubator that invests in early stage web companies" (whatever that means) is Bagley's former employer.

Quite a weekend for this train wreck of a company.

LATER: More babble.

© 2007 Gary Weiss. All rights reserved.


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

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Friday, May 11, 2007

Did CEO Patrick Byrne Lie to the SEC?

This is fast becoming one of CEO Patrick Byrne's worst days in quite a few red-ink-smeared months. Pardon me if I am not shedding tears.

The fiasco du jour has been Byrne's failure to disclose for one year his subpoena by the SEC, and subsequent meltdown and spin campaign. His loyal subordinate, stalker-in-residence Judd Bagley, has served his boss by smearing Jim Cramer and spying on users of the Investor Village message board. (Hey, he's not called "Sleazey McSleaze" for nothing. Personally I think "the nauseating spectacle of Judd Bagley" has more of a ring to it.)

Now, on top of that, some have questioned whether the real issue du jour is not delay or concealment, but rather that Byrne has been flat-out lying.

It's not surprising that Byrne would lie, for the simple reason that he is a liar. I can say that with some confidence because just about every word out of his mouth about me has been a lie. But lying to the SEC is not a wise move. Under the right circumstances it can be a criminal offense.

A sharp-eyed reader posted the following as a comment and I think it is worth repeating here:

Did [Byrne] not only fail to disclose but also make false disclosures? See the deal docs for OSTKs 12/06 [secondary offering]:

Except as disclosed in the Prospectus, there are no legal, governmental or regulatory actions, suits or proceedings pending, nor, to the Company’s knowledge, any legal, governmental or regulatory investigations, to which the Company or any Subsidiary is a party or to which any property of the Company or any Subsidiary is the subject that, individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect or materially and adversely affect the ability of the Company to perform its obligations under the Agreement; to the Company’s knowledge, no such actions, suits or proceedings are threatened or contemplated by any governmental or regulatory authority or threatened by others; and there are no current or pending legal, governmental or regulatory investigations, actions, suits or proceedings that are required under the Act to be described in the Prospectus that are not so described.
The key words here are "except as disclosed in this Prospectus." Ain't no disclosure of a subpoena of Byrne, boys and girls. Seems to me that Byrne is saying, "I'm not subpoenaed." But he was.

Gee, is that bad? Is it bad when a CEO misleads people who buy stock issued by his company?

Next comes reformed felon Sam Antar, who has pointed out on message boards that Byrne certified to the accuracy and completeness of the 10-K for 2006, as required by Sarbanes-Oxley.

Here's the relevant wording:
I, Patrick M. Byrne, certify that:

1. I have reviewed this Annual Report on Form 10K of, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;….
Oh my goodness. I think an SEC subpoena of the CEO of a company, in connection with an investigation of the CEO and his company, is a "material fact." He omitted that.

Gosh. Is that bad? Is it bad when a CEO omits a material fact from a 10-K and then certifies that he hasn't omitted any material facts from the 10-k?

And if it is bad, what is the SEC going to do about it?

The SEC may have bigger fish to fry in its investigation of Byrne and, but if you ask me this one stinks to high heaven.

UPDATE: Byrne's continued message board rants continued over the weekend.

© 2007 Gary Weiss. All rights reserved.


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

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Should the Media Allow Darfur-Divestment Ads?

I've been getting emails for some time from, which is seeking to persuade Fidelity Investments, Berkshire Hathaway and other high-profile investors to divest their supposedly Sudanese-related investments.

I'm undecided as to whether divestment is a good idea, or if the stocks targeted by this organization have any genuine connection to the misery in that part of Sudan. However, I do believe that the organization should be allowed to run an ad it has designed, which you can find here, seeking to persuade Fidelity to join the campaign.

A letter from the coalition, posted on the website, urges that Fidelity divest its portfolio of PetroChina, Sinopec, and other major companies that allegedly provide significant financial support the Government of Sudan.

So I'm disturbed by an email that I received from the Darfur campaign today. It says as follows:
Following apparent pressure from Fidelity Investments, Business Week recently joined CNN and Newsweek in “holding” Darfur advertisements calling on Fidelity to divest its Sudan-linked holdings. Despite Fidelity’s campaign to short-circuit the divestment movement, the Save Darfur Coalition has still effectively communicated the divestment message through various media including Boston television, the Washington Post and USA Today.

I have no opinion on the merits of the coalition's claims, but I think they should be heard, and that their advertisements should be published.

© 2007 Gary Weiss. All rights reserved.


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

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A Solution to the Murdoch Bid -- Not

One interesting, and superficially attractive, solution to the Rupert Murdoch bid for Dow Jones & Co. materialized at a forum yesterday at the Investment Company Institute annual meeting.

Here's a portion of the Associated Press account:

The $60 per share offer prices Dow Jones in excess of what it's worth, [Business Week executive editor John] Byrne said Thursday, but he thinks Murdoch will put more money on the table because "another $5 or $10 would break up the family."

That's a reference to Dow Jones' controlling shareholders, the Bancroft family, who oppose Murdoch's bid. "If they want to keep it a family-owned business, they should buy out the public shareholders at Murdoch's price," Byrne said after the panel, held as part of the Investment Company Institute's annual meeting.

Sure, that would keep the company under its current ownership. But to raise that kind of money, Dow Jones would have to go into hock, and possibly cut staff and shred operations. There's quite a history of that in similar situations. Strikes me as a non-solution.

A better idea, which is a tad more in the realm of possibility than it was a week ago, is that the Bancroft family holds firm.

© 2007 Gary Weiss. All rights reserved.


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

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