Gradient Analytics Settles w/ OSTK

Discussion in 'Wall St. News' started by flytiger, Oct 13, 2008.

  1. << Back Announces Settlement of Claims Against Gradient Analytics and Its Principals
    All Attention Now on Copper River and Its Principals

    SALT LAKE CITY, Oct. 13 /PRNewswire-FirstCall/ --, Inc. (Nasdaq: OSTK) announced it has settled all claims against Gradient Analytics and its principals and officers named as defendants in Overstock's defamation case filed in Marin County, California. chairman and CEO, Patrick Byrne said, "I am pleased to publish this statement from Gradient Analytics:

    Gradient issues this Statement concerning research reports previously
    published by it regarding, Inc. Having reviewed all SEC
    filings, relevant accounting literature, and all other information
    available to it, Gradient now believes that, to the best of its
    knowledge, Overstock's stated accounting policies did in fact conform
    with Generally Accepted Accounting Principles (GAAP) and regrets any
    prior statements to the contrary.

    Some of Gradient's prior reports asserted that certain Overstock
    directors -- i.e., Allison Abraham, John Fisher and Gordon Macklin --
    were not independent directors according to Gradient's criteria for
    evaluating independence. However, under NASD Rules, those directors were
    independent. Gradient extends its apology to the Macklin family for any
    remarks or observations concerning the suitability or independence of Mr.
    Gordon Macklin, who served with distinction as a past President of the
    NASD, was widely regarded as a pioneer in the financial industry, and,
    due to his expertise, was asked to serve on many corporate boards.

    Gradient has examined and improved its internal policies concerning how
    it communicates with clients, including hedge funds, and the media.
    Gradient acknowledges that former Executive Vice President of Research
    Matthew Kliber, a named defendant in this litigation, was not responsible
    for any of Gradient's research on Overstock.

    Gradient regrets that the parties have been embroiled in litigation over
    its reports and looks forward to both sides' moving forward with their
    respective businesses.

    Byrne added: "I wish Gradient Analytics the best in their future endeavors. will now focus on the remaining defendants, Copper River, David Rocker, and Mark Cohodes."

    The details of the settlement reached today are confidential.

    About, Inc. is an online retailer offering brand-name merchandise at discount prices. The company offers its customers an opportunity to shop for bargains conveniently, while offering its suppliers an alternative inventory distribution channel., headquartered in Salt Lake City, is a publicly traded company listed on the NASDAQ Global Market System and can be found online at is a registered trademark of, 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 about the future focus of the lawsuit. Our Form 10-K for the year ended December 31, 2007, our subsequent quarterly reports on Form 10-Q, or any amendments thereto, 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.

    SOURCE, Inc.
  2. Thanks for the update, Patrick. This is good news. I look forward to more threads on ostk, Mr. Byrne.
  3. Mvic


    He's not Patrick but it is good news, thanks for letting us know.
  5. Broad Tossers? A Cook’s Tour? Settles With Gradient
    Posted by Jennifer Forsyth
    PatrickByrne_art_257_20081013132543.jpg CEO Patrick Byrne travels down an aisle on his Go-ped scooter at his company

    Long before John Mack and Dick Fuld thought short sellers were destroying every company, Patrick Byrne thought short sellers were destroying his, aided by the research firm Gradient Analytics. In 2005, Mr. Byrne,’s founder and president, claimed that Gradient’s negative reports on the online retailer drove down the stock and benefited short sellers. Here’s the CNN/Money story. Byrne, after issuing a series of blistering criticisms of Gradient, sued in Marin County Superior Court in California, alleging libel, unfair business practices and tortious interference.

    Here’s Byrne in full cry from February, 2008: “These broad-tossers have given us a two-and-a-half year cook’s tour of the California appellate process. They engage in such legal posturing because they know this case will expose a widespread, illegal Wall Street practice that harms American companies and makes money at the expense of American investors. I look forward to the day when the scofflaws are no longer in a backroom seeing their orthodoxies supped by biddable regulators and tractable New York financial journalists, but are instead sitting in a California courtroom trying to rationalize their schemes to twelve citizens.”

    [LB NB: The reference to a “cook’s tour of the California appellate process” likely refers to the anti-SLAPP suit that Gradient brought against Overstock last year. California’s anti-SLAPP statute is designed to allow for the dismissal of lawsuits that attempt to silence legitimate speech. Click here, here and here for prior posts on the anti-SLAPP statute, starring Britney, Borat and Ethan Hawke. As for Byrne’s last bit about tractable journos, we take no offense.]

    When last we heard from Gradient Analytics, the firm was “looking forward” to the upcoming jury trials, saying it welcomed the opportunity for a jury “to reject the unsupported theories” espoused by Byrne.

    Seems Gradient decided a jury trial wasn’t the best route after all. Today issued a news release saying the company had settled all claims against Gradient. In it, Gradient had to back off on at least one point. Overstock quotes a statement from Gradient as follows: “Having reviewed all SEC filings, relevant accounting literature, and all other information available to it, Gradient now believes that, to the best of its knowledge, Overstock’s stated accounting policies did in fact conform with Generally Accepted Accounting Principles (GAAP) and regrets any prior statements to the contrary.”

    The terms of the settlement were not disclosed.
    Permalink | Trackback URL:
    Save & Share: Yahoo! Buzz | Share on Facebook | | Digg this | Email This | Print
    Read more: Commercial Litigation
  6. OK duck stick. I"m free a minute. Now, I want you to put on your thinking cap, and ponder this:

    Gradient acknowledges that former Executive Vice President of Research
    Matthew Kliber, a named defendant in this litigation, was not responsible
    for any of Gradient's research on Overstock.

    Now, for the 2 billion dollar question, then who 'authored' the reports, sicced the SEC on OSTK, where they found nothing, and billed Milberg Weiss by the hour? And why would they do that.

    For further reading on the subject, I suggest you go to the Overstock site and read the affidavits from former Gradient employees. Thank you for your prompt attention to this matter.
  7. jem


    Flytiger -

    How come I sense that the amount of the settlement was small.

    after all of the publicity, I would have thought overstock would have taken over gradient or at least have gotten them to admit some sort of nefarious scheme.
  8. My sense is, the settlement is 'significant', and that Gradient is my new best friend, and Wall St. 's worst nightmare. This is Cramer and Becky Quick's nightmare too. Greenberg has been toast for a while. Don't see Herbie on CNBC, do you? How come nobody asks about that?

    Go watch ''. Tell me why Gradient had a class action law firm on a time card. Ask yourself how Patrick got that. Read the Affidavits from Gradient employees. And then, you tell me the settlement wasn't significant.

    No, this only gets better. And they have no friends. The public is in arms, and who sits on juries? Pissed off people that can't get off of jury duty who blew their 401k's out Friday.
  9. I was going to kill myself, and go back a few years. I forgot they did this a few months back. Look at the names. You tell me who goes next. BTW, Becky Quick was Cramer's producer at the time:D Guess what "producers' do? BTW, the Director of Enforcement of the SEC is one, LINDA THOMSEN. She squashed those subpoenas you will read about, and she has been recommended for disciplinary action by the SEC IG in the Aguirre/John Mack/ Pequot investigation. This is just going to get better.

    August 27th, 2008 by Mark Mitchell
    On May 4, we published “The Story of Deep Capture,” which described in 80-pages how certain influential journalists, many connected to CNBC’s Jim Cramer, spent their careers feeding off the biased, negative information of a clique of short-selling hedge fund managers, many of them connected to CNBC’s Jim Cramer. We noted that these same journalists went out of their way to whitewash hedge fund crimes – especially the use of naked short selling to manufacture phantom stock. CNBC has responded to this story as follows.

    On May 5, one day after the story’s publication, Jim Cramer went on CNBC to say that he believed naked short selling was a big problem. This was the first time he had ever said such a thing. Nowadays, Cramer regularly rails against short-seller crimes. It is his number one issue. He says that some short-sellers are “diabolical” and seek to destroy public companies for profit. He says that short-sellers “plant” false stories with compliant journalists. He says the SEC doesn’t do anything because it is “captured.” He says he is on a “crusade” to stop illegal naked short selling and save the financial system.
    Make of this what you will.
    On May 20, CNBC reporter Herb Greenberg (who is a former editor of Cramer’s website,, and features prominently in our story) participated in an on-air discussion with CNBC’s Joe Kernen (who is not mentioned in our story) and David Faber (who sparked the collapse of Bear Stearns by reporting false information fed to him by a hedge fund manager whom he has “known for 20 years”). None of the CNBC reporters mentioned Deep Capture by name, but it is clear that this discussion constituted their reply to our website’s contents.

    Kernen said that Deep Capture reporter Patrick Byrne “is not above blatant lying.” He cited no evidence for this, except to note that Patrick had once said that CNBC reporters stand by the fax machine awaiting information from their hedge fund sources. Faber chimed in that CNBC doesn’t even have a fax machine. Then Herb said, yep, there’s “lots of innuendo, lots of innuendo…saying it’s somewhat journalism…you can try to say anything, calling the New York media the Media Mob because this guy knows this guy knows this guy….”

    Actually, we’d reported that Herb is a guy who knows a guy named David Rocker. Herb also knows the guys at a shady “independent” financial research shop called Gradient Analytics. For a while, Herb’s research assistant was working out of Gradient’s offices, and Herb’s former co-editor at was running a dodgy hedge fund out one of Gradient’s back rooms. At the same time, at least one of Gradient’s managers had acquired fake IDs and multiple aliases to conceal his business dealings.

    According to sworn affidavits from former Gradient employees, Rocker, who was then a short-seller and the largest outside investor in, dictated much of Gradient’s biased ”independent” research, and fed it to Herb, who repeated it verbatim in negative stories. One employee swore under oath that Herb would time his stories (which pummeled stock prices) so that Rocker could maximize his short-selling profits.

    Meanwhile, according to a timesheet obtained by Deep Capture, Gradient’s employees were paid an hourly rate by Milberg Weiss, a corrupt law firm. Milberg used to file bogus class-action lawsuits against companies targeted by Herb, Gradient, and their short-selling friends. Herb’s stories and Gradient’s research would cause companies’ stock prices to fall. Within days, Milberg would then file lawsuits blaming the companies for their falling stock prices. For evidence, the lawsuits sometimes cited Herb. For plaintiffs – well, Milberg had to bribe people to get them to be plaintiffs. That’s why Milberg’s top partners are now in prison.

    Most of the companies targeted by Herb, Gradient, Milberg and a small group of short-sellers happened to have been victimized by massive levels of illegal naked short selling. SEC data proves this. But Herb has long insisted that he’s uninterested in phantom stock, or that it doesn’t exist. Last winter, when a respected Citigroup analyst referred to naked short selling, Herb accused her of “seeing UFOs.”

    In 2006, the SEC launched an investigation into Gradient, and issued subpoenas to Herb,, Cramer, Rocker, and a Dow Jones reporter named Carol Remond. The investigation was dropped after Cramer vandalized his subpoena live on CNBC and Herb’s media friends said that Patrick Byrne is a liar and the SEC had violated Herb’s freedom of speech.

    Those are some of the facts that we reported in our story. We also referred to Sam Antar, a convicted felon who orchestrated a massive fraud at Crazy Eddie’s, the chain of appliance stores known in the 1980s for its commercials: “Our prices are insaaaane!” The Crazy Eddie guy works closely with Gradient Analytics. He is paid by short-sellers to conduct “independent” financial research. This primarily involves going on Internet message boards to heckle and threaten opponents of illegal naked short selling.

    According to a recent court case, the Crazy Eddie guy has delivered at least $250,000 in cash to Barry Minkow, a convicted felon who orchestrated a massive, Mafia-financed fraud at the ZZZZ Best carpet cleaning company. Minkow now works out of the Community Bible Church in San Diego, where he is the resident short-seller-financed, “independent” financial-research-producing-criminal-church pastor.

    Believe it or not, no respectable investigator has given any credence to the false “independent” research produced by the Crazy Eddie guy or the criminal-carpet cleaner-in-a-church. But Herb liked them. He said so.

    Then, in April, Herb opened his own “independent” financial research company. The company’s website says in big letters that it is “bridging financial journalism and forensic analysis,” which is sort of like bridging John Gotti and the judge, but it seems only fair that Herb should profit from the short-sellers who profited from his journalism.

    If he hasn’t already, Herb should sell his “independent” research to Whitney Tilson, who is one of his favorite short-selling sources. As we have noted on Deep Capture, Tilson pays the “independent” Crazy Eddie guy and the “independent” ZZZZ Best guy.

    Anyway, after “The Story of Deep Capture” came out, Herb went on CNBC to say it was “a lot of innuendo.” He said it was nothing more than “this guy knows this guy knows this guy.”

    A minute later, apropos of nothing, Herb began talking about Whitney Tilson. Herb didn’t mention that this Tilson guy knows the Crazy Eddie guy who knows the carpet-cleaning, bag-holding, criminal pastor guy. Herb didn’t mention that Tilson has donated a lot of money to those guys. But Herb did say that Tilson is a “big, big philanthropist.”

    That was Herb’s response to our story.

    On July 15, the SEC issued subpoenas to a number of Herb’s hedge fund sources and announced an “emergency order” to prevent illegal naked short-selling from crashing the financial system. Herb has not been heard from since. In fact, we haven’t seen much of Herb since June 31, when CNBC dispatched him to the San Diego county fair to report on the hard times that had befallen vendors of deep-fried Twinkies.

    Maybe, at last, that was CNBC’s response to Herb.

    Of course, if you miss Herb’s surreal journalism, you should ask CNBC to bring him back. You can send your requests to the fax machine in the CNBC newsroom. The number is: 201-735-3200.)
  10. Good call. I'm glad that OSTK has been vindicated.
    #10     Oct 14, 2008