The legal drama between Rocker Partners and Overstock.com took another step yesterday, as the New York hedge fund called the online retailer's lawsuit "patently" frivolous" and promised to file a countersuit.
The fracas began last week when Overstock filed suit against Rocker Partners and the Phoenix-based forensic accounting firm Gradient Analytics, claiming that the two companies drafted "tainted and malicious" research notes about the retailer. The notes, Overstock claims, caused a steep decline in its share price.
The financial services industry veterans fired back yesterday.
"In our opinion, Overstock's lawsuit is patently frivolous and is simply the latest reckless act by Overstock's CEO, Dr. Patrick Byrne," said Lawrence Rolnick, a partner with the Roseland, N.J., law firm Lowenstein Sandler, which is representing Rocker Partners.
"We believe that Overstock has made these fallacious allegations in an attempt to distract the investing public from its business woes and poor management, which have caused the analyst community to lose confidence in the stock and persistently lower their earnings estimates, ratings, and price targets," Rolnick said in an Aug. 18 report from Reuters.
Officials with Salt Lake-based Overstock could not be reached for comment, the Reuters report indicated. Overstock's Byrne, however, has made no secret of his beef with Rocker Partners, which widely known as one of Wall Street most active short seller and has been credited with discovering early flaws in companies before their shares tanked.
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