LOL Carol Redman answers to the SEC??????ROTFLMAO..Get ready!!
[$$] SEC Probes Overstock's Claim Of Stock-Market Manipulation
at The Wall Street Journal Online (Fri 9:06pm)
SEC Probes Overstock's Claim
Of Stock-Market Manipulation
By KARA SCANNELL
February 25, 2006
A battle between an Internet discount retailer and a stock-research firm has attracted the attention of the Securities and Exchange Commission, which is investigating allegations of market manipulation.
With hedge funds acquiring more clout in their ability to move stocks, some companies are fighting back, accusing short-sellers of using tactics such as manipulated or false research to drive down the price of stocks. One battle -- and one that has piqued the SEC's interest -- involves accusations by Overstock.com Inc. that Gradient Analytics Inc., a stock-research firm in Scottsdale, Ariz., negatively adjusted its research at the request of a hedge fund betting against the stock.
Overstock.com is an online closeout retailer, offering a variety of discount, brand-name merchandise, ranging from furniture to jewelry and electronics. Its stock has been on a roller-coaster since it went public in 2002, trading at more than $75 a share in December 2004. At 4 p.m. trading Friday on the Nasdaq Stock Market, the stock was down 87 cents, or 3.6%, to $23.40.
As part of the inquiry, the SEC has taken the unusual step of subpoenaing two journalists from Dow Jones & Co., the publisher of The Wall Street Journal, asking for any communications between the reporters and Gradient or Rocker Partners, a hedge fund run by David Rocker, a well-known short-seller.
The subpoena, dated Feb. 7, seeks emails, phone records and other materials provided by employees of Gradient or Rocker to Carol S. Remond, a columnist for Dow Jones Newswires, or Herb Greenberg, a columnist for MarketWatch, an online financial publication owned by Dow Jones. Both Ms. Remond and Mr. Greenberg have written about Overstock.com. In a column published yesterday, Mr. Greenberg said he doesn't plan to be "bullied into changing the way I do anything."
"We were served with the subpoenas and we have served objections in response. It's our understanding that the SEC has decided not to seek production of any documents from Dow Jones at this time," said Amy Wolfcale, a spokeswoman for Dow Jones. "The SEC may come back in the future."
John Nester, an SEC spokesman in Washington, said, "Under longstanding practice, the SEC generally subpoenas journalists only when it's absolutely necessary and after careful thought and consideration." Karen Hinton, a spokeswoman for Gradient, said the firm doesn't comment on regulators' communications but cooperates fully with any information requests. Mr. Rocker said he doesn't comment on legal matters. Both firms have previously denied any wrongdoing.
Lawyers say they don't know of any cases where the SEC has tried to subpoena journalists to get information to help make a civil securities suit. The subpoena was issued by the SEC's San Francisco office.
Overstock filed a lawsuit in a California state court in August alleging Gradient and Rocker Partners, of Millburn, N.J., were part of an effort to drive down its stock. Patrick Byrne, Overstock president, said he hasn't received a subpoena and has been cooperating with federal and state authorities. "We have boxes and boxes of evidence as well as witnesses and such that we have made available," he said.
Gradient was formed in 1996 and was previously known as Camelback Research Alliance. The firm's Web site describes one of its products as an "innovative forensic accounting service that enhances the investment and portfolio decision making of quantitative and qualitative portfolio managers" and others.
--Joe Hagan contributed to this article.
Write to Kara Scannell at kara.scannell@wsj.com
