In the past I've scoffed at notions that Overstock.com, a third-rate Internet retailer that bellyaches about "naked short selling," has been beset by sale of "phantom shares." Well, my bad. Appears that the reports are true, and I certainly hope that regulators investigate and take necessary enforcement action.
White collar crime-fighter Sam Antar reports that such shares indeed have been issued--by Overstock itself. The company disclosed "that it improperly issued an extra 201,421 unregistered shares of common stock in connection with the company’s 401-K Plan."
That's a lot of unregistered shares for a company with a razor-thin float like Overstock. The company said that it “may be subject to civil and other penalties by regulatory authorities as a result of the failure to register these transactions.”
Sure hope so. And while regulators are on the subject, why not take action against Overstock for using accounting gimmickry to bolster its share price? It's all laid out in black and white in Sam's blog.
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