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.

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