Post by jannikki on Jun 1, 2007 6:00:26 GMT -4
STOCKGATE TODAY
An online newspaper reporting the issues of Securities Fraud
Overstock Court Success Rattles Group of Financial Reporters – June 1, 2007
Dave Patch
How rare has it become for Overstock.com to get a fair shake from a populous group of US business writers these days? Look no further than the recent news out of Marin County California for the answer.
On Wednesday the Marin County court of appeals ruled in favor of a lower court ruling involving Overstock.com in their lawsuit against Gradient Analytics. The appeals court panel of 3 judges voted unanimously in favor of the lower courts decision that Overstock.com had established a probability of prevailing on the merits of its case.
Now typically a ruling such of this is positive for a company and their investors and something the business media typically responds to favorably in the corresponding articles. But that is not the case when the company happens to be Overstock.com.
Overstock.com and CEO Patrick Byrne has assembled their own personal set of public detractors as this particular public company must not only fight for their rights to a fair public market but must also wade through the bile of certain financial media representatives who have made it a personal mission to destroy the company and the CEO who runs it.
The lawsuit, Byrne stated “is about criminal activities that are undermining American capital markets. For nearly 22 months, these blackguard defendants have made frivolous arguments trying to hide their actions in the skirts of the First Amendment.”
So what is the big deal with reporting the ever changing events surrounding this closely guarded issue?
For starters, it is quite apparent that a public companies concern over market abuses and two court rulings favoring their claims are not sufficient grounds for an open discussion by Marketwatch.com journalist Herb Greenberg.
Greenberg, in his Marketwatch.com sponsored blog, responded to the courts ruling by chastising Overstock.com, Byrne, and the 3-judge panel for the use of testimony from an individual Greenberg has repeatedly called a liar. The testimony Greenberg disputes comes from a former Gradient employee whom Gradient claims is disgruntled. While Greenberg has never met the individual the word of Gradient’s Karen Hinton and the Gradient lawyers is enough evidence for Greenberg. Greenberg has never actually read the testimony provided to the court,nor did he see the evidence the individual provided to support such testimony but heck, if the defendant claims he is a liar and a disgruntled former employee that is sufficient for this reporter.
Greenberg further criticizes Overstock for celebrating the court ruling in his blog while Greenberg himself celebrated the previous SEC decision not to continue an investigation into Gradient over the Overstock allegations. Apparently celebrating a court victory is a no-no if such a decision goes against Herb’s personal opinions and objectives.
Greenberg’s personal position on this issue is that “the suit, in the end, appears to have been the ultimate diversionary tactic and an effort to silence critics at the expense of his company's shareholders.” Unfortunately Greenberg fails to disclose that he personally has had free access to the Gradient reports and while first denying it until caught used the Gradient reports real time to generate the views and opinions drafted into his columns. The Greenberg columns were so real time with the Gradient releases that there left little time for Greenberg to expense any effort in actual fact checking of the Gradient analysis. Herb takes the Gradient reports as Gospel as public record has shown.
There is a personal relationship between Gradient and Greenberg and thus Greenberg has a personal stake in having Gradient prevail in this case regardless of the merits of the case. Such a personal stake is exactly why Greenberg stalks Overstock drafting biased, negative only commentary regardless of the facts and issues at hand.
Following Greenberg’s lead, Gary Weiss a Forbes journalist, blogger, and friend of Greenberg drafted his sixth blog on Overstock.com since May 21st. The near daily blogs are dedicated to attacking the company, company employees and CEO Byrne. You don’t even get past the latest Blog headline to know where Weiss would go with the court news. Weiss headlined the bog “The Grotesque Overstock.com Story Gets Grotesquer.”
Like his friend Greenberg, Weiss ridiculed the company calling the lawsuit a “junk lawsuit” and then opined that “Overstock will be coming out with a (no doubt suitably juvenile) press release soon.”
Does this sound like an objective member of the financial media ready to report or discuss a court ruling?
Apparently Weiss is under the impression that Overstock, unlike himself, has no right to release the positive news from the courts to the public. Only such ethically challenged men of such limited character as Weiss and Greenberg are allowed to report this incident to the public as only they can, with the proper spin and misdirection into this story.
Not to be outdone, the NY Post’s Roddy Boyd entering the fray with a more subtle but equally biased tactic in reporting the Overstock court success.
Unlike Greenberg and Weiss, Boyd actually started out reporting this story on the merits of the decision itself leaving out all the drabs of his personal bias toward Byrne and the company. But Roddy is a little bi-polar and by the end of the short column even Boyd could not shy away from an opportunity to slam the company while advertising for the merits of Gradient Analytics.
Roddy must want that free access pass Greenberg has.
“Ironically, the ruling comes as Gradient's original concerns - laid out in a series of reports from 2003 to 2006 - have largely borne fruit.” Boyd stated. “Overstock.com's earnings shortfalls and inability to generate cash have forced it to issue stock - after telling investors it had no plans to do so - twice, at increasing discounts to the market price.” Unfortunately Boyd never elaborated on the fact that generating cash by selling shares at artificially manipulated prices would in fact be harmful to the investors or that this so happens to be the foundation to Overstocks allegations.
Boyd, Greenberg, and Weiss each conveniently ignored the Gradient press release that came out well before Overstock.com’s publication and contained gross errors in the reporting. Gradients Karen Hinton disseminating the PR, and Gradients position, to every member of the media she could contact prior to the publication looking for their support in releases generated. Such close ties to the media should be an early red flag that something real could be there.
The press release, with a headline of “Gradient Analytics Says Independent Research and Free Speech Rights Are in Jeopardy” went beyond the court ruling in the case to once again slam Overstock the company. Gradient stated that “over the 21 months since OSTK commenced the litigation, its market value has declined by over 57%. OSTK lost $160 million in 2006 and reported continuing losses in Q1 2007. We have been proved correct in our analysis.”
The problem with the release, and required a correction by Gradient, was that Overstock.com had not lost $160 Million in market value over these past 2 years. Gradient’s analysis of market loss was off by a whopping of 60% and yet they presented those numbers as accurate to the public. Repeated inaccuracies such as these are the foundation to the Overstock.com claims as Gradients allegations over these years have mostly proven to be unsubstantiated.
Overstock has contended that the market losses Gradient speaks of were directly related to the Gradient reports disseminated and public record of settlement abuses in the stocks trading since these reports were published and since journalists such as Greenberg stared his attacking public missives.
To test the ethics of the reporters in question, inquiries regarding the Gradient inaccuracies were directed towards Weiss and Greenberg through their public blogs. Each inquiry came to a dead end as neither wished to respond to the questions raised over Gradients inaccurate reporting. Weiss proceeded to go so far as to block the inquiry from his site restricting the free speech rights of others in a blog where he forcefully berates Overstock over his position that Overstock is violating Gradients right to free speech.
Imagine having to live under such a public display of double standard, from a journalist no less whose livelihood is based solely off an assumption of free press.
While all this makes for an amusing circus act there is an underlying issue just begging for some intervention. There are damages here that can no longer be ignored, both monetary damages as well as the loss of investor confidence in our capital markets.
Overstock.com has been listed on the SEC’s threshold security list for well over 500 days. The threshold security list is a list of companies whose stock trades with excessive levels of settlement failures because of a shortage of shares that can be used to settle the trades. Gradient has ignored the fact that these settlement failures will have a direct impact on market pricing instead simply placing blame on the company for fighting for their equal rights to fair markets. Reporters with close ties to Gradient then attack the company for going after Gradient without ever conducting the proper unbiased due diligence required of a reporter.
Under the Constitutional right of free speech and the media’s right to free press comes the responsibility and expectation of accuracy. When those within the financial press violate their responsibility to inform the public of all necessary perils for personal gain those Constitutional rights must be called into question, especially if the actions of such result in the acceptance of fraud against others.
Members of the media have no assumed right to aid and abet fraud under the umbrella of Constitutional rights.
Over a year ago the SEC was provided evidence of a conflict of interest between financial journalists and the sources they use for their stories. Since that time, CNBC personality Jim Cramer has come out publicly and discussed his personal experiences where members of the financial press were either willingly or manipulated into drafting false and misleading stories to manipulate stock prices.
Journalists today continue to use such relationships, and their direct access to the public, to disseminate a biased and misleading reporting of our public companies a bias that moves markets to the benefit of the sources.
At some time in the not to distant future SEC Chair Chris Cox will have grow that spine he lost and dust off those subpoena’s once issued against members of the financial press. To continue to sit on the sidelines and watch this small subset of journalists manipulate the information our public hears about market events is a set up for disaster. Like a drug addict, the usage only snowballs as the expectations for more grows.
Today there are a handful of companies who are being harassed by a small gang of ethically challenged individuals. Tomorrow the handful of companies could grow to a dozen and next year it could be two dozen. Chairman Cox and the Commission can deal with it then when the investor losses will be absurdly large or deal with it now when the situation is manageable. Historically the Commission waits, waiting this time could derail the process of capital market development as investors and companies alike move their interests away from the public markets.
For the record, the abuses Greenberg, Weiss, and Boyd claim do not exist in these markets have been openly identified as a real problem by present SEC Chairman Chris Cox as well as former Chairs Levitt, Pitt, and Donaldson. With such admissions by these individuals in the know this particular group of close knit journalists continue to aid those who benefit from the abuses. The Commission needs to understand why.
For more on this issue please visit the Host site at www.investigatethesec.com (posted with permission)
Copyright 2007
An online newspaper reporting the issues of Securities Fraud
Overstock Court Success Rattles Group of Financial Reporters – June 1, 2007
Dave Patch
How rare has it become for Overstock.com to get a fair shake from a populous group of US business writers these days? Look no further than the recent news out of Marin County California for the answer.
On Wednesday the Marin County court of appeals ruled in favor of a lower court ruling involving Overstock.com in their lawsuit against Gradient Analytics. The appeals court panel of 3 judges voted unanimously in favor of the lower courts decision that Overstock.com had established a probability of prevailing on the merits of its case.
Now typically a ruling such of this is positive for a company and their investors and something the business media typically responds to favorably in the corresponding articles. But that is not the case when the company happens to be Overstock.com.
Overstock.com and CEO Patrick Byrne has assembled their own personal set of public detractors as this particular public company must not only fight for their rights to a fair public market but must also wade through the bile of certain financial media representatives who have made it a personal mission to destroy the company and the CEO who runs it.
The lawsuit, Byrne stated “is about criminal activities that are undermining American capital markets. For nearly 22 months, these blackguard defendants have made frivolous arguments trying to hide their actions in the skirts of the First Amendment.”
So what is the big deal with reporting the ever changing events surrounding this closely guarded issue?
For starters, it is quite apparent that a public companies concern over market abuses and two court rulings favoring their claims are not sufficient grounds for an open discussion by Marketwatch.com journalist Herb Greenberg.
Greenberg, in his Marketwatch.com sponsored blog, responded to the courts ruling by chastising Overstock.com, Byrne, and the 3-judge panel for the use of testimony from an individual Greenberg has repeatedly called a liar. The testimony Greenberg disputes comes from a former Gradient employee whom Gradient claims is disgruntled. While Greenberg has never met the individual the word of Gradient’s Karen Hinton and the Gradient lawyers is enough evidence for Greenberg. Greenberg has never actually read the testimony provided to the court,nor did he see the evidence the individual provided to support such testimony but heck, if the defendant claims he is a liar and a disgruntled former employee that is sufficient for this reporter.
Greenberg further criticizes Overstock for celebrating the court ruling in his blog while Greenberg himself celebrated the previous SEC decision not to continue an investigation into Gradient over the Overstock allegations. Apparently celebrating a court victory is a no-no if such a decision goes against Herb’s personal opinions and objectives.
Greenberg’s personal position on this issue is that “the suit, in the end, appears to have been the ultimate diversionary tactic and an effort to silence critics at the expense of his company's shareholders.” Unfortunately Greenberg fails to disclose that he personally has had free access to the Gradient reports and while first denying it until caught used the Gradient reports real time to generate the views and opinions drafted into his columns. The Greenberg columns were so real time with the Gradient releases that there left little time for Greenberg to expense any effort in actual fact checking of the Gradient analysis. Herb takes the Gradient reports as Gospel as public record has shown.
There is a personal relationship between Gradient and Greenberg and thus Greenberg has a personal stake in having Gradient prevail in this case regardless of the merits of the case. Such a personal stake is exactly why Greenberg stalks Overstock drafting biased, negative only commentary regardless of the facts and issues at hand.
Following Greenberg’s lead, Gary Weiss a Forbes journalist, blogger, and friend of Greenberg drafted his sixth blog on Overstock.com since May 21st. The near daily blogs are dedicated to attacking the company, company employees and CEO Byrne. You don’t even get past the latest Blog headline to know where Weiss would go with the court news. Weiss headlined the bog “The Grotesque Overstock.com Story Gets Grotesquer.”
Like his friend Greenberg, Weiss ridiculed the company calling the lawsuit a “junk lawsuit” and then opined that “Overstock will be coming out with a (no doubt suitably juvenile) press release soon.”
Does this sound like an objective member of the financial media ready to report or discuss a court ruling?
Apparently Weiss is under the impression that Overstock, unlike himself, has no right to release the positive news from the courts to the public. Only such ethically challenged men of such limited character as Weiss and Greenberg are allowed to report this incident to the public as only they can, with the proper spin and misdirection into this story.
Not to be outdone, the NY Post’s Roddy Boyd entering the fray with a more subtle but equally biased tactic in reporting the Overstock court success.
Unlike Greenberg and Weiss, Boyd actually started out reporting this story on the merits of the decision itself leaving out all the drabs of his personal bias toward Byrne and the company. But Roddy is a little bi-polar and by the end of the short column even Boyd could not shy away from an opportunity to slam the company while advertising for the merits of Gradient Analytics.
Roddy must want that free access pass Greenberg has.
“Ironically, the ruling comes as Gradient's original concerns - laid out in a series of reports from 2003 to 2006 - have largely borne fruit.” Boyd stated. “Overstock.com's earnings shortfalls and inability to generate cash have forced it to issue stock - after telling investors it had no plans to do so - twice, at increasing discounts to the market price.” Unfortunately Boyd never elaborated on the fact that generating cash by selling shares at artificially manipulated prices would in fact be harmful to the investors or that this so happens to be the foundation to Overstocks allegations.
Boyd, Greenberg, and Weiss each conveniently ignored the Gradient press release that came out well before Overstock.com’s publication and contained gross errors in the reporting. Gradients Karen Hinton disseminating the PR, and Gradients position, to every member of the media she could contact prior to the publication looking for their support in releases generated. Such close ties to the media should be an early red flag that something real could be there.
The press release, with a headline of “Gradient Analytics Says Independent Research and Free Speech Rights Are in Jeopardy” went beyond the court ruling in the case to once again slam Overstock the company. Gradient stated that “over the 21 months since OSTK commenced the litigation, its market value has declined by over 57%. OSTK lost $160 million in 2006 and reported continuing losses in Q1 2007. We have been proved correct in our analysis.”
The problem with the release, and required a correction by Gradient, was that Overstock.com had not lost $160 Million in market value over these past 2 years. Gradient’s analysis of market loss was off by a whopping of 60% and yet they presented those numbers as accurate to the public. Repeated inaccuracies such as these are the foundation to the Overstock.com claims as Gradients allegations over these years have mostly proven to be unsubstantiated.
Overstock has contended that the market losses Gradient speaks of were directly related to the Gradient reports disseminated and public record of settlement abuses in the stocks trading since these reports were published and since journalists such as Greenberg stared his attacking public missives.
To test the ethics of the reporters in question, inquiries regarding the Gradient inaccuracies were directed towards Weiss and Greenberg through their public blogs. Each inquiry came to a dead end as neither wished to respond to the questions raised over Gradients inaccurate reporting. Weiss proceeded to go so far as to block the inquiry from his site restricting the free speech rights of others in a blog where he forcefully berates Overstock over his position that Overstock is violating Gradients right to free speech.
Imagine having to live under such a public display of double standard, from a journalist no less whose livelihood is based solely off an assumption of free press.
While all this makes for an amusing circus act there is an underlying issue just begging for some intervention. There are damages here that can no longer be ignored, both monetary damages as well as the loss of investor confidence in our capital markets.
Overstock.com has been listed on the SEC’s threshold security list for well over 500 days. The threshold security list is a list of companies whose stock trades with excessive levels of settlement failures because of a shortage of shares that can be used to settle the trades. Gradient has ignored the fact that these settlement failures will have a direct impact on market pricing instead simply placing blame on the company for fighting for their equal rights to fair markets. Reporters with close ties to Gradient then attack the company for going after Gradient without ever conducting the proper unbiased due diligence required of a reporter.
Under the Constitutional right of free speech and the media’s right to free press comes the responsibility and expectation of accuracy. When those within the financial press violate their responsibility to inform the public of all necessary perils for personal gain those Constitutional rights must be called into question, especially if the actions of such result in the acceptance of fraud against others.
Members of the media have no assumed right to aid and abet fraud under the umbrella of Constitutional rights.
Over a year ago the SEC was provided evidence of a conflict of interest between financial journalists and the sources they use for their stories. Since that time, CNBC personality Jim Cramer has come out publicly and discussed his personal experiences where members of the financial press were either willingly or manipulated into drafting false and misleading stories to manipulate stock prices.
Journalists today continue to use such relationships, and their direct access to the public, to disseminate a biased and misleading reporting of our public companies a bias that moves markets to the benefit of the sources.
At some time in the not to distant future SEC Chair Chris Cox will have grow that spine he lost and dust off those subpoena’s once issued against members of the financial press. To continue to sit on the sidelines and watch this small subset of journalists manipulate the information our public hears about market events is a set up for disaster. Like a drug addict, the usage only snowballs as the expectations for more grows.
Today there are a handful of companies who are being harassed by a small gang of ethically challenged individuals. Tomorrow the handful of companies could grow to a dozen and next year it could be two dozen. Chairman Cox and the Commission can deal with it then when the investor losses will be absurdly large or deal with it now when the situation is manageable. Historically the Commission waits, waiting this time could derail the process of capital market development as investors and companies alike move their interests away from the public markets.
For the record, the abuses Greenberg, Weiss, and Boyd claim do not exist in these markets have been openly identified as a real problem by present SEC Chairman Chris Cox as well as former Chairs Levitt, Pitt, and Donaldson. With such admissions by these individuals in the know this particular group of close knit journalists continue to aid those who benefit from the abuses. The Commission needs to understand why.
For more on this issue please visit the Host site at www.investigatethesec.com (posted with permission)
Copyright 2007