John Reeves, 05 October 2005
The nearly endless fount of mirth surrounding Patrick Byrne’s lawsuit against Gradient Analytics, short-selling hedge fund Rocker Partners, and others is obscuring a case with fairly broad implications for security analysis, First Amendment rights, and the credibility of our public markets.
While fanciful visions of Sith Lords and evil shorting hordes make for good copy, this is a lawsuit that is about something more substantive: an accusation that Gradient and Rocker resorted to unfair business practices to knock down Overstock.com’s (NASDAQ:OSTK) share price. Too much coverage has been spent plumbing the entertainment value, and nearly none on the facts of the suit itself.
It is our hope that the following information, culled from three documents acquired by The Motley Fool, will provide readers with a clear view of what is being alleged.
In an affidavit recently acquired by The Motley Fool, Demetrios Anifantis, who identifies himself as a former employee of the research firm Gradient Analytics, alleges that the company conspired with David Rocker of the hedge fund Rocker Partners to publish damaging information “for the purpose of negatively influencing the price of Overstock shares so that Rocker could profit from its existing or intended short positions in Overstock shares.
