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Overstock Appears on the Regulation SHO Threshold List for 666 Consecutive Trading Days

The Devil May Care, but Apparently the SEC Does Not
December 13, 2007: 09:00 AM EST


SALT LAKE CITY, Dec. 13 /PRNewswire-FirstCall/ -- Overstock.com, Inc. announces that today marks the 666th consecutive trading day that it has appeared on the Nasdaq's Regulation SHO threshold list (see http://www.nasdaqtrader.com/aspx/regsho.aspx).

As Securities and Exchange Commission Chairman Christopher Cox stated last year: "The need for Regulation SHO [effective January 2005] grew out of long-standing and growing problems with failures to deliver stock by the end of the standard three day settlement period for trades, some of which were symptoms of abusive 'naked' short selling. Selling short without having stock available for delivery, and intentionally failing to deliver stock within the standard three-day settlement period, is market manipulation that is clearly violative of the federal securities laws. In response to these problems, Regulation SHO imposed mandatory close out requirements on broker-dealers with fail to deliver positions in securities with a substantial level of persistent fails. A clearing broker-dealer now has to close out a fail to deliver position in a threshold security that has persisted for 13 consecutive settlement days by purchasing securities of like kind and quantity. A security becomes a threshold security if there is an aggregate fail to deliver position of 10,000 shares or more for five consecutive settlement days; if the position is equal to 0.5% of the issuer's total outstanding shares; and if the security is included on an [exchange's] threshold security list." (See http://www.sec.gov/news/speech/2006/spch071206cc2.htm.)

Despite the requirement that a clearing broker-dealer must close out a fail to deliver position in a threshold security that has persisted for 13 consecutive trading days, Overstock has been on the Regulation SHO threshold list for 666 consecutive trading days (and a total of 706 trading days). "Apparently, the SEC is not serious about enforcing the close out provisions of Regulation SHO or stopping 'market manipulation that is clearly violative of the federal securities laws.'" said Overstock chairman and chief executive officer Patrick Byrne. "For possible reasons for the SEC's indifference, I recommend you listen to a speech that I gave in October. It is at http://www.deepcapturethemovie.com."

Curiously, the Regulation SHO Threshold Lists only report companies that are victims of abusive and violative trading; they provide no disclosure of either the amount of fail to deliver positions or of the institutions who fail to deliver. A person can obtain information on the size of past (but not current) fail to deliver positions through petition to the SEC's Freedom of Information Act (FOIA) office, but then only many months after the request. For example, Overstock is still waiting for a response to a August 23, 2007 FOIA request asking for the aggregate amount of daily failures to deliver in Overstock from January 1, 2007 through May 31, 2007, notwithstanding a September 19, 2007 acknowledgement letter from the SEC.

In addition, none of the SEC, the Depository Trust and Clearing Corporation and the Nasdaq will disclose the names of the institutions failing to deliver, even through FOIA petition, as "fails statistics of individual firms ... is proprietary information and may reflect firms' trading strategies." (See http://www.sec.gov/spotlight/keyregshoissues.htm.)

"When I asked SEC Director of the Division of Trading and Markets Erik Sirri how Overstock could stay on the Regulation SHO threshold list month after month, Dr. Sirri responded that 'the SEC doesn't regulate for the corner cases,'" said Overstock senior vice president, corporate affairs and legal Jonathan Johnson. "That raises the question, does the SEC also not enforce the 'corner cases' either? That might explain how Overstock can perennially appear on the Regulation SHO threshold list."

Many companies, besides Overstock, continue to appear on the Regulation SHO threshold list for extended periods of time and, despite withering criticism from Members of Congress, the U.S. Chamber of Commerce, public companies and informed market experts, the SEC has been slow to adopt meaningful Regulation SHO reform. Recently, in a commentary published by The Washington Times (see http://www.washingtontimes.com/article/20071121/COMMENTARY/111210005/1012/COMM ENTARY), Johnson urged the SEC to put a stop to these manipulations by adopting the "G.O.L.D." standard in Regulation SHO reform: "G": eliminate Regulation SHO's "G"randfather clause; "O": eliminate Regulation SHO's "O"ptions market maker exception; "L": require short-sellers to "L"ocate and borrow shares before selling them; and "D": require the exchanges to "D"isclose fully and promptly the aggregate failure-to-deliver positions for every threshold list company.

To its credit, the SEC has now eliminated the grandfather clause. However, the SEC has yet to implement the remaining slate of necessary reforms.

On this portentous day, Overstock renews its assertion that the solution to the problem of manipulative naked short selling is the complete adoption of the G.O.L.D. standard and calls for the SEC to (1) eliminate quickly Regulation SHO's options market maker exception; (2) require short-sellers to locate and borrow shares before selling them; and (3) require the exchanges (or the DTCC) to disclose fully and promptly the aggregate FTDs for every company listed on the Regulation SHO threshold list. In addition, Overstock calls for the SEC to enforce the close out requirements of Regulation SHO so that no fail to deliver position ever persists for more than 13 days.

About Overstock.com

Overstock.com, Inc. is an online "closeout" retailer offering discount, brand-name merchandise for sale over the Internet. The company offers its customers an opportunity to shop for bargains conveniently, while offering its suppliers an alternative inventory liquidation distribution channel. Overstock.com, headquartered in Salt Lake City, is a publicly traded company listed on the NASDAQ Global Market System and can be found online at http://www.overstock.com.

Overstock.com(R) is a registered trademark of Overstock.com, Inc. All other trademarks are the property of their respective owners.

This press release contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements include, but are not limited to, statements regarding the SEC ever enforcing provisions of Regulation SHO, a person ever being able to obtain Regulation SHO related data from the SEC through a FOIA request, and the possible reasons for the company remaining on the Regulation SHO threshold list. Our Form 10-K for the year ended December 31, 2006, our subsequent quarterly reports on Form 10-Q, and our other subsequent filings with the Securities and Exchange Commission identify important factors that could cause our actual results to differ materially from those contained in our projections, estimates or forward-looking statements