Overstock aims to get rid of class action motion
A firm in the US that has been accused of manipulating the market using its ‘digital dividend’ has appealed to a judge to have the case thrown out.
Overstock, which is an e-commerce company, has appeared in front of the Utah District Court to ask the judge to get rid of what it calls a “meritless” class action lawsuit.
The lawsuit, which has seen the firm accused of securities fraud, is “meritless” according to Overstock.
The firm is accused of using its digital dividend to push out short sellers by manipulating the market.
It is understood that Patrick Byrne, who served as CEO of Overstock at the time of the claims, has been opposed to so-called “naked short sellers” for a long time.
Byrne has also been named as a defendant in the lawsuit.
The lawsuit was first brought last year – at the time, an investor named Benjamin Ha filed a complaint.
In it, reference was made to the comments that Byrne – who has since stood down from his post – had made in the past.
“While defendant Byrne had previously, at different times, launched into public tirades over short selling and naked short selling, the tZERO Dividend was his secret plot to finally obtain hegemony over them – and it almost worked,” it read.
However, the firm now claims that there is no evidence in the lawsuit that a “deceptive act” took place.
It also claims that the plaintiffs who are bringing the case have not alleged that Overstock manipulated the market with false information when its digital dividend was released.
It has also been accused in the lawsuit of making wrong financial declarations last year.
However, the firm is seeking to defend itself from that by citing a “safe harbour” law.
The projections were “quintessential forward-looking statements protected by the [Private Securities Litigation Reform Act’s] safe harbor,” lawyers for Overstock claim.
The firm has also gone on to say that the plaintiffs have failed to bring about evidence that Overstock was aware of “inconsistent” information.
“In fact, the Complaint does not contain a single contemporaneous allegation – any person, meeting, or internal document – suggesting that any Defendant knew of, or had access to, information inconsistent with any challenged statement,” the filing reads.
The case against Overstock has been brought by a group of plaintiffs including the Mangrove Partners Master Fund, Ltd.
This investment management company describes itself on its website as “a value-oriented investment manager”.
“Our investment objective is to organically compound net worth while minimizing the chances of a permanent loss of capital,” it said.
Overstock has seen a large-scale overhaul in its senior personnel in recent months.
Byrne left the firm after it was revealed that he had engaged in a relationship with an agent of Russia.
The firm’s chief financial officer Gregory J. Iverson also quit.