Overstock CEO 'Gratified' to Get SEC Subpoena

Overstock.com(OSTK Quote - Cramer on OSTK - Stock Picks) said late Tuesday that it received a subpoena from the Securities and Exchange Commission related to a "broad range" of documents, including those related to the company's short-selling allegations.

In after-hours trading, shares of the online retailer slumped $2.16, or 8.6%, to $23 on Instinet.

Overstock said it intends to review the subpoena and respond in due course, but in a statement, Chairman and CEO Patrick Byrne said, "I may be the first CEO in history to celebrate receiving an SEC subpoena."

In a press release, Overstock said the subpoena requests "all documents relating to the Company's accounting policies, targets, projections, estimates, recent restatement, new technology systems and their implementation, and communications with and regarding analysts.

Last year, Overstock filed a lawsuit alleging a wide-ranging conspiracy to manipulate the share price of the Internet retailer. Overstock alleges that research firm Gradient Analytics was in cahoots with short-sellers including Rocker Partners, which owns a small stake in TheStreet.com(TSCM Quote - Cramer on TSCM - Stock Picks), publisher of this Web site. Both Rocker and Gradient have denied wrongdoing.

In addition, the subpoena requests all information relating to the filing of its complaint against Gradient Analytics, Inc., communications regarding shareholders who did not receive the Company's proxy statement in April 2006, communications with shareholders, and communications regarding short selling, naked short selling, purchases and sales of Company stock, obtaining paper certificates, and stock loan or borrow of Company shares."

Byrne also said: "Some of the requests suggest the whispering of the blackguards, but I remain unconcerned about their hokum. In truth, I am gratified to see that the SEC is looking into the issues about which I have been speaking: I believe our capital markets are broken in a deep way, our system of corporate voting and governance is a hoax, the savings of Americans are being drained through our financial system's fissure of unsettled trades, and the system appears to be cracking around Overstock.com (of course, I could be proved wrong if they would force the settlement of, or even reveal the size of, all unsettled trades in OSTK, which I believe number from 7 to 30 million shares).

"While some of the miscreants file frivolous delaying motions, and others schmooze with hedge funds and write what they are told to write (yet call themselves 'journalists' to shield their perfidy behind the First Amendment), I on the other hand applaud the SEC's actions and eagerly anticipate my chance to get these issues into court."