It is hard to know who to root for in this one.
Overstock.com (OSTK), the struggling online retailer headed by America’s nastiest CEO, has upped the stakes in a long-running legal battle with two of America’s least-beloved bailout recipients, Goldman Sachs (GS) and the Merrill Lynch unit of Bank of America (BAC).
Overstock said it made a filing with a New Jersey court allowing it to seek triple damages in its 2007 suit against the brokers. The firms now have 30 days to challenge or answer the amended complaint, Overstock said, and a trial is set for December. Goldman declined to comment and BofA didn’t immediately comment.
Not surprisingly, Overstock’s suit claims the brokerage firms conspired to drive down the company’s price via so-called naked short-selling – the practice of selling a stock without first locating shares that can be borrowed to close the transaction out. Overstock’s nasty CEO, Patrick Byrne, has spent years on a shrill crusade against naked short selling.
This has drawn catcalls from his many critics, who say his company’s stock price is better explained by the retailer’s poor business performance. The company made $8 million in 2009, but it has lost $256 million since its creation and “we may not be able to sustain or increase profitability on a quarterly or annual basis in the future,” Overstock warns in its latest annual report with regulators.
The losses have done nothing to quiet Byrne, certainly. He said in 2003 that “when opportunities come along where we can knee the shorts in the groin, that’s always good for fun and amusement,” and his comment in Thursday’s press release is similarly combative.
“I am really going to enjoy watching Goldman Sachs try to justify its nefarious schemes to a jury box with 12 Americans in it,” he said. Byrne is likely overstating his own case there. Still, it will be interesting to see what happens when an irrational force collides with an irredeemable object.
