Fung_derf,
I appreciate the detailed recap. Most people skip right past the mechanics.
But you’re missing the takeaway.
Overstock’s preferred share dividend—whether it was delayed, modified, or challenged—still forced shorts to cover. The mere threat of a dividend they couldn’t deliver on triggered the squeeze.
Short sellers covered in a panic, which drove the price spike.
The Tenth Circuit ruling confirmed there was no fraud because Overstock was transparent about their intentions.
And most importantly: the court’s decision effectively created a playbook for companies to legally initiate strategies aimed at short sellers—if they disclose everything.
No fraud. No deception. Just strategy.
Overstock may have settled its litigation, but they walked away with validation that companies can deploy this strategy if done properly.
And that’s exactly what makes preferred share dividends and backstop strategies the nightmare scenario for naked shorts.
Whether you like it or not, the blueprint is there.
— Krombacher
Market Data 
Markets 
AI
