|Overstock.com Announces Court Declines to Seal Evidence
in Goldman Sachs/Merrill Lynch Case
PR Newswire | March 8, 2012
SALT LAKE CITY, March 8, 2012 /PRNewswire/ -- Overstock.com, (NASDAQ: OSTK - News) today announced that in its stock manipulation suit against Goldman Sachs and Merrill Lynch the court denied mostly all of defendants' motion to seal the evidentiary record on the summary judgment hearing. The ruling is significant because the evidence submitted to the court lays out in detail the means by which Goldman Sachs and Merrill Lynch used naked short selling, in concert with others, to manipulate downward Overstock.com's share price.
"We are thrilled," said Patrick Byrne, chairman and ceo of Overstock.com. "I could not imagine that a post-2008 public would be denied access to this evidence, which displays in living color the flaws in our capital markets and in the regulatory structure that governs them. Now the public will have a window through which to view this evidence and judge for itself the fraudulent and systemically risky behavior at issue in this case."
Jonathan Johnson, president of Overstock.com, said, "On the one hand, defendants have gone overboard to keep this evidence locked away from public view, while on the other they maintained that the conduct is perfectly legal. We believe it's not legal, and that the public has an independent right to make that determination, based on the evidence."
Four major media groups, The Economist, The New York Times, Rolling Stone Magazine and Bloomberg News intervened in the case and joined Overstock.com in opposing Goldman and Merrill's motion to seal the evidence.
Overstock.com officials acknowledged that Goldman and Merrill will likely appeal to try to keep the evidence sealed, but expressed confidence in the correctness of the court's ruling and that the decision will be upheld on appeal.
On January 10, 2012, Overstock.com announced that the court granted a summary judgment motion in favor of the defendants, ruling that the conduct at issue in the case did not take place "in California" as required under California law. The company believes the summary judgment ruling was error and is appealing.
At the summary judgment hearing, counsel for Overstock.com reviewed Defendant's extensive "in California" conduct showing: a large percentage of the trades that were part of the manipulative scheme were effected on the Pacific Coast Stock Exchange, which was located in San Francisco; Merrill Lynch Professional Clearing Corporation's San Francisco office played a significant role in the fraud; and that Goldman Sachs concertedly purchased a type of "conversion trades" that were part of the manipulative scheme which were cleared by Merrill Lynch Professional Clearing Corporation in San Francisco, and were effected on the Pacific Coast Stock Exchange. Counsel also laid out for the court the evidence to support the stock manipulation claim, evidence that yesterday, the court refused to seal.
"Ultimately, despite defendants sanding the gears with the summary judgment, we will win this case," Byrne said. "It will be a hard fight, but we will prevail, first on appeal and then at trial. Almost as important to us as a trial victory is the fact that now the public will know about Goldman and Merrill's conduct."
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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 regarding the legal ruling covered and the future of this and any subsequent case or case issue. Our Form 10-K for the year ended December 31, 2011, 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.