Overstock.com Gets Hit With Securities Fraud Complaint
Tue 31st Dec 2019 | Posted by Glancy Law, on Blog
An Overstock.com shareholder is accusing the online retail company of a “pump and dump” scheme related to the bizarre departure of former chief executive officer Patrick Byrne.
Shareholder Benjamin Ha says Overstock inflated its stock price to punish short sellers by announcing a dividend, the Washington Post reports. Byrne in September sold 4.7 million shares in the company hours before Overstock announced that it was delaying the dividend and less than a week before Overstock lowered its earnings forecast for the year. The moves sent the company’s stock price tumbling.
Byrne resigned from his position in August, a few weeks before he sold off the stocks for some $90 million. He claimed at the time of his resignation that he had become entangled in a “deep state” investigation related to the 2016 presidential election. Byrne also claims that he had a three-year relationship with unmasked Russian agent Maria Butina as part of an effort to assist a Federal Bureau of Investigations probe.
Although Byrne resigned from his position, the Washington Post reported that he was effectively forced out when the company’s insurer carrier said it would not renew Overstock’s liability coverage if Byrne remained at the helm.
Ha alleges that Byrne was “in possession of material adverse non-public information” when he sold the shares.
Federal investigators are also looking into the dividend. Overstock disclosed in a November earnings report that the Securities and Exchange Commission has subpoenaed documents related to the offering. The SEC has also been investigating tZero, a cryptocurrency firm owned by Overstock that was supposed to offer the dividend.
Legal Protections for Securities Fraud Victims
Unfortunately, the “pump and dump” scheme alleged in the Overstock case is an all too common occurrence.
These scams happen when a person or multiple people artificially inflate the price of a stock using false or incomplete information about the company. Those people typically sell the stock at a price above the market value and before it inevitably takes a dive. That leaves other shareholders—including those who bought when the stock was rising—stuck with tanking stock prices.
Anyone who has been victimized by a “pump and dump” or related scam has the right to seek compensation for the harm caused. A seasoned securities attorney can help you ensure that those responsible for the scam are made fully accountable.
Speak With a Securities Attorney Today
If you or a loved one has been the subject of securities fraud, it’s important to seek the counsel of an experienced securities attorney. A seasoned lawyer can help you weigh your rights and options, including whether to start, join or opt out of a class action lawsuit.
At Glancy Prongay & Murray, our securities attorneys have been representing people in securities, consumer and other fraud cases for more than 25 years. We have a strong track record of success in these cases. Call us at (310) 201-9150 or contact us online to speak with an attorney today.