Where would we be without our weekly tech lawsuit? This time, Overstock.com is the one pointing fingers, getting quite irate at 12 brokerage firms who they claim did illegal stock manipulation. To the tune of $3.48 Billion, Overstock.com is angry that their share price is dropped dramatically towards the end of last year, with losses over the whole year were $97 Million. The reason? Not because of bad business, according to them, but rather because of “short selling”:
On Friday, Overstock went after most of Wall Street, with a $3.48bn lawsuit filed against 12 brokerage firms, alleging a "massive, illegal stock market manipulation scheme".
Overstock claims the banks caused its share price to go into freefall, through naked short selling. Short selling is when traders sell shares to drive prices down with the intention of buying back later at a lower price.
How $97 Million in losses gets translated to $3.48 Billion I'll never know, but CEO Patrick Byrne claims that things will improve this year, following costly upgrades that were hastily implemented during 2006. Interestingly enough, they also are mentioning that they will be selling higher-priced, higher-margin goods more often. Isn't that exactly what they claim they are against? Whoops.