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Byrne sparked enormous controversy last summer by accusing a number of investment bankers, financial journalists and hedge fund managers of collaborating to ruin the reputations of companies in order to profit when the stock price of those companies tumbles. Byrne claims that his online store has been victimized by such a scheme.
In a now infamous summer conference call, he seethed over an alleged conspiracy--going so far as to say that it involved a mastermind he compared to a "Sith Lord," as well as people who had once trafficked in stinger missiles.
Last August, Salt Lake City, Utah-based Overstock filed suit against Rocker Partners, a short-selling hedge fund, and Gradient Analytics, a research firm. Both companies are bearish on Overstock, which is profitless. In the wake of his lawsuit, the U.S. Securities and Exchange Commission has reportedly opened an investigation into the two companies. Critics have accused Byrne of orchestrating the SEC's probe.
"I don't pull any strings over at the SEC," Byrne told CNET News.com. "The SEC didn't need me to develop this case, and my sense is that this has to do with far more than Overstock.com. We're the tip of the iceberg."
But the ranks of Byrne supporters shrank by one last week, when his own father and company chairman, John "Jack" Byrne, publicly came out against his son's campaign to clean up Wall Street practices. The elder Byrne told The Wall Street Journal last week that he considers his son's holy war with the financial community a distraction and that he may resign his chairmanship over it.
"You know, when you're 74, you feel differently every day, based on what you have for breakfast that morning," the younger Byrne said of his father. "I never really expected him to get this fight."
Byrne elaborated on the current controversy in an extended interview last Thursday with CNET News.com.
Q: You seem to relish the role of the outsider or naysayer. What makes you that way?
Byrne: I guess by nature I'm a contrarian. I remember when I was about 11, my parents gave me a blanket with a white sheep on it facing one way and one little black sheep facing the other. I had sort of figured out by that point I was going to see things differently.
How did your fight with Wall Street start?
Byrne: First thing, you cannot believe anything being said about this battle by the financial community, by the East Coast financial press. There has been an urban myth for some years that there's a financial technique that hedge funds can use to make money but in the process destroy smaller-cap companies--small, maybe midcap companies. It's known by many names. I think of it as "failures to deliver"--one flavor of which is naked shorting. But there are other flavors of this problem.
The collective intelligence of the bloggers can actually be pretty good. They started getting in contact with me. When I first heard from them, I thought they were a bunch of wackos. I thought they lined their hats with tinfoil. It was really like that movie "Conspiracy Theory." But the success of any theory is its ability to make accurate predictions. They started making predictions about the things I was going to see.
They were really far out, strange predictions--and they all started coming true. So I started paying them some attention. The big picture is this: What the war is really about is this technique, or this urban myth, that this financial community has a method of profiting virtually risk-free but at the cost of destroying small companies. There is certainly a technique of orchestrating a bear raid on a company to hurt it.
I think there is a group of miscreants in the market that have to be flushed out of the market. No financial reporters from the East Coast financial media will report that that's what the fight is about--that's what the lawsuit is about--other than to just paint it as, "Oh! This is a CEO who is cheesed off because his stock went down, but if he only paid more attention to his company, maybe it wouldn't go down." That's the party line. They're a bunch of party hacks.
Can you tell me who they are? Is this a conspiracy?
Byrne: "Conspiracy" isn't the right word; it's an ideology. Remember I lived in Communist China; I know what it's like to witness party hacks developing a party line. So, yeah, I definitely think that among the reporters, there is a spectrum.
I think that there are fine, smart reporters who report the news fairly. They want to get at the truth, and they are people who could work as analysts themselves. The next level down are reporters that maybe get a little lazy: They get very close to some elements in the Wall Street community, they take a lot of tips from them, and maybe they rely a little bit too heavily on the tips.
The next level down includes some reporters who sit and wait for the phone to ring from their buddy at the hedge fund, who takes them out to the mansion in Long Island. And I wouldn't be surprised if there are some--a very small number of reporters--who actually are on the take. They have displayed such impenetrable stupidity. They've actually gone out of their way to let me know that they have an agenda and that they're not going to report fairly. They seem to gloat in the sense of power that they get by letting me know that.
What about Herb Greenberg?
Byrne: Well, Herb Greenberg (of Dow Jones' MarketWatch) would certainly be at the lower end of that spectrum. You know, I'm not saying he is on the take, but I think he is nothing more than a lapdog for certain powerful hedge funds.
(The San Francisco office of the SEC issued subpoenas to Greenberg and another financial journalist that required them to turn over phone and e-mail communications with sources. In an interview last week with The San Francisco Chronicle, Greenberg, who has been critical of Overstock in his columns, said: "The subpoenas were not about an investigation of me. They were about an investigation of Gradient Analytics." )
There are some people who have accused you of just blowing smoke to cover a profitless company, and there are others who say you've gone crazy. Has this hurt your business?
Byrne: Well, I could say just as easily that these guys are blaming Overstock for now being the target of federal subpoenas and investigations. But the truth is, you can see I was speaking about this when our company was blowing through its numbers and blowing everyone's expectations as well. This has nothing to do with Overstock; that's just a party line.
The SEC issued subpoenas, including one to Greenberg. Is this SEC investigation a result of your accusations?
Byrne: I'm glad you asked me that. When we filed our suit, we heard from several federal and state authorities and law enforcement agencies. We had developed an awful lot of good data, including e-mail, computer files, witnesses, affidavits...much more than what we've made public.
Being good, concerned, law-abiding citizens, we of course provided this to all these law enforcement agencies. I would say the reaction of different agencies has been different. Until yesterday, I had never acknowledged that I even met with the SEC. But yes, the SEC was one of those agencies. What became clear in our communication and meeting was that the agency was far down this path before we got here. I can't ask them questions, but it became very clear to me that they had to develop an extensive understanding on their own, and I just took the opportunity to fill in a few tiny squares for them.
It's kind of funny. The role is reversed. These guys have turned into a bunch of conspiracy nuts. They're saying these SEC investigations and subpoenas were orchestrated by somebody else and that they're innocent and how awful this is. Well, that's exactly what most companies say when they come under a bear raid. They say, "Hey, we've got some short seller who has dug up phony evidence, pasted it together, and they've tried to get some investigations launched."
I saw a clip where Herb Greenberg used the word "conspiracy" six times in 7 seconds. So, the irony of this situation is not lost. I'm anything but the guy behind the
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Overstock.com Inc., hedge fund, controversy, Wall Street, prediction
I would like to see some "journalist": acknowledge that this case is about a lot more than just Overstock.
As a reporter I would be looking for the guts of the story not dancing around the side-lines. But then, maybe the managing editor has told him to stay away from too much dirt-digging.
I really hope that this is just the beginning of the exposé on just one of many rorts to be found flourishing on Wall Street. As someone who has worked in the financial industry I know first hand that it exists largely for its own purposes, its own greed, and actually serves little purpose apart from that. Most functions of the financial community could be handled in other ways, with far less cost, and significantly more benefit for the company and the man in the street.
Go Patrick. I just hope you survive it, because it is a big dragon to slay.
PS. I love what you're doing with Worldstock - I just hate the fact that your doing what I have wanted to for while.
How can you sell or "borrow" shares that don't exist?
Bud Burrell is a known penny stock tout with sleezy offshore dealings and CFRN uses Christianity for stock fraud and mind control just as the CMKX Diamond fraud has of Urban Cassavant et.al. has.Truly sick this gang is.
David Patch and his 'investigatethesec' naked short tout site is James Dale Davidson connected and that website appeared to replace NAANSS when Davidson was in SEC litigation although ex-SEC ATTORNEY NEVER CHARGED HIM FOR USING THE NAKED SHORT CLAIM TO DIVERT ATTENTION FROM HIS AND AGORA INC.S ILLEGAL PUMP AND DUMPS OF ENDOVASC AND GENEMAX.Brent Baker has since left the SEC AND HAS A CUSHY JOB WITH PATRICK BYRNE LYING ABOUT OVERSTOCK.COM BEING A VICTIM OF 'NAKED SHORT SELLING',COINCIDENTALLY - NOT !!.
Patch used to tout Genemax before moving over to the ragingbull jagh medai holdings board to tout that fraud for Gary Valinoti.
Byrne thinks he's a secret agent man.In truth he is a cheap petty penny stock con artist like the NCANS fraudsters he funds like he did Swift Boat Captains etc.James Dale Davidson's NAANSS OR NATONAL ASSOCIATION AGAINST NAKED SHORT SELLING WAS LOCATED IN THE SAME BLAINE,WASHINGTON OFFICE WHERE DAVIDSON'S GENEMAX FRAUD PUMP AND DUMP WAS LOCATED.SOME OF THE SHARES THEY DUMPED(WHILE FRAUDULENTLYY CRYING ABOUT BEING 'NAKED SHORTED)
WAS THROUGH LOM OF BERMUDA.
Probably Davidson's Beltway connections are why the SEC refuses to look at Davidson's LOM connections even though it is fact Genemax shares were dumped from there,probably through a Charles Schwab account among others.James DALE Davidson recommended LOM for offshore transactions in his scammy book,'The Sovereign Individual',written with the Lard William Rees-Mogg without disclosing his financial interests at the time.
Patrick Byrne and his daddy Jack funded a million dollar anti-John Edwards campaign and it appears allowing him to run stock scams is the Beltway's way of saying thanks.
Again Patrick Byrne is aiding and abetting massive penny stock fraud that extends to the UAE and Dubai where money laundering with unaudited penny stock shares is involved while the Bush administration erroneously claims money laundering no longer occurs.
James DALE Davidson has been involved with Amenni and Nannaco there and no doubt other scams.Bellador Group may be Davidson connected and they dumped unaudited Endovasc shares far and wide after Davidson did the first massive pump and dump through Agora Inc.'s 'Vantage Point',cyber and mail fraud tout publication. Both NAANSS and Agora and Davidson then claimed Endovasc was 'naked shorted'.After that Endovasc shares began being touted and dumped through Bellador Group of Kuala Lumpur and Dubai.
I have reason to suspect Bellador may have CIA connections and strangely they even promoted SRA International shares that the CIA's In-Q-Tel is invested in to Dubai clients although it is a national security stock with monopoly on 'IT' business in the Beltway.But nonetheless although the Hong Kong securities office warns its citizens about Bellador Group the U.S. SEC does nothing TO PROTECT ITS CITIZENS AND CONTINUES TO ALLOW THEM TO PUMP AND DUMP AND BOILER ROOM WORTHLESS U.S. PENNY STOCKS SCAMSTERS SUCH AS THE NCANS GANG PROMOTE AS VICTIMS OF 'NAKED SHORTING'.Sure.
Nearly every alias posting here is part of Byrne's NCANS fraud by he way.'Clogging' as they accuse others of doing is part of their modus operendi as well as getting critics removed from ragingbull and Yahoo message boards and or threatening their lives.
Check out Gary Weiss' blogspot that follows this fraudulent 'baloney' gang :
http://www.garyweiss.blogspot.com/
Also these indymedia links :
SEC Commissioner Christopher Cox vows to bring James Dale Guckert/Jeff Gannon to Justice ?
http://cvilleindymedia.org/newswire.php?story_id=1840
Senator Bennett :Is Patrick Byrne's NCANS a Fraud ?
http://cvilleindymedia.org/newswire.php?story_id=1840
Not saying you're wrong, but there's a lot of mud-slinging on these sites and not much actual dirt to be found.
If you are indeed a burnt investor in someone's phony penny stock scam then I feel for you, but I must admit anyone who acts upon an unsolicited piece of advice in a largely anonymous email about a penny stock really should take some of the blame for losing their money as it is all about playing on greed and it catches the greedy. And what if such a mail come out from Igora? They make money out of promoting stocks for other people (read their disclaimers at the bottom of the emails), but until you can show me the money trail that proves that they themselves were invoved it seems a big claim to say it is their felony). Also, there are plenty of stock-picking services whch lose money for their clients - hey I can do that without a stock letter - and you could claim that they ramp it for their own profit, but that's a risk that you'r going to run so once again you've got to
do due diligence on the newsletter publishers and the stock.
As a youngster I got caught up in a ramp up of a company which took in quite a number of the people within the Australian financial community, all based on heresay - but I realised I'd learnt my first major lesson in trading, and had suffered because I wasn't willing to due the due diligence that is required of any source of information).
So I guess what I'm saying is that for people reading your post, I'd suggest that before they jump to conclusions about what you've said they should actually verify some of the claims you have made. I couldn't find anything verifiable after digging around your sites.
I don't know Patrick Byrne from the next guy, and certainly therefore would not vouch for him, but I can't see how you can call a company turning over $439 million in revenue a penny stock that's been flogged, nor can I see why he would start making a whole lot of noise about scams to the world if he was conductinng them - it's the fastest way to attract attention to yourself. He may be a criminal mastermind, or he may just be diverting attention from his company's performance but it seems to be weird that he would do that if he was involved in those sort of deals.
He has made claims which are actually being investigated by the SEC, and not just for his company, and maked shorting does go on - so what if it isn't a massive occurrence - it is still illegal and should be stopped. He has made claims about his accounting, drawing attention to it, and that invites scrutiny and criticism, which is a strange thing to do if your a fraudster - and nor is running a profitless company a crime . Ther are other high-profile companies that have been going for similar lengths of time in this industry have failed to make any profits, so he's not exactly the poster boy for that.
And, another thing, doing a dutch auction instead of a standard IPO doesn't make any friends in Wall Street, and I can't see any major benefit in Byrne doing that other than for the reason he wanted to have a level playing field for the investors. On top of that, he may be conning us about Worldstock and maybe screwing the poor and whatever, but I can't see what major benefit he'd be getting out of spinning a story like that. Plenty of other US companies exploit workers around the world for profit, he could do so without inviting scrutiny by making those claims. He may actually be an idealist - you never know.
So if you do have a case, make it with a bit mor substance, and if you don't then get the juice before you do. Otherwise you put yourself in the same category as what you are acusing him of being.
Overstock has one of the lowest customer satisfaction scores. I only use them as a standard for what an item should cost. I suspect that when a problem arises it usually is because they don't have it anymore.
May I ask which type of item you purchased.
Clothes, furniture, cd's etc.?
- It's about time
- by cardinalbird2 March 7, 2006 11:23 AM PST
- I'm grateful for Patrick Byrne's courage to take on Wall Street. There is an insidious culture within the financial community that is every bit as tyrranical, secretive and paranoid as the Bush Administration. I wouldn't be surprised that, as the result of the impending lawsuit and SEC investigation, Congress creates legislation like the Sarbanes-Oxley Act of 2002 to address this problem. Afterall, it's always those folks who feel they're entitled to cross the line to enrich themselves at the expense of us honest chumps who inspire criminal laws.
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