Patrick Byrne, the former Overstock CEO who has had endured a turbulent 2019, saw his year take another twist on Friday when he was served with a class action lawsuit alongside former CFO Greg Iverson, who are both accused of securities fraud. The case involves a dividend relating to the tZERO trading platform backed by Overstock, which investors claim involved a six month lock up period that was only designed to push the share price up to punish short sellers.
Byrne’s “Secret Plot”
The complaint alleges that Byrne and Iverson are guilty of manipulating the stock price upwards via the tZERO Dividend and “failing to disclose the true risks in defendants’ plan, or the plan itself, and the real motive behind the tZERO Dividend, which was to punish short seller for a decade long campaign against them for shorting Overstock…”. The investors also claim that the tZERO Dividend, which investors couldn’t sell for six months, was Byrne’s “secret plot to finally obtain hegemony over them (investors) – and it almost worked.” The filing claims that Bynre only ceased with the scheme because the Securities and Exchange Commission “quietly put a stop to Overstock’s attempted market manipulation scheme.”
Byrne’s Bad 2019 Gets Worse
The filing will come as another blow to Byrne, who left his role as CEO in August after the revelation of his relationship with a now-jailed Russian spy. Byrne allowed Overstock’s crypto investment arm Medici Ventures to plough some $100 million into getting tZERO off the ground, which they did in June this year, a decision that, the complaint alleges, was on the back of Byrne and Iverson extolling “the benefits that this would purport to investors.” The pair allegedly failed however to disclose the “extreme risks and foreseeable volatility that was likely to result if and when defendants’ true intentions behind the tZERO Dividend Offering were ever discovered.”