SALT LAKE CITY, Jan. 10, 2012 /PRNewswire/ -- Overstock.com (NASDAQ: OSTK) today announced that the California court in its prime broker lawsuit granted the defendants' motion for summary judgment.
"Obviously, we are disappointed with the court's ruling, which was not on the merits of the claims, but on a narrow interpretation of California law having to do with whether this conduct took place in California," said Jonathan Johnson, President of Overstock.com. "We believe the court is wrong. We presented more than enough 'in California' evidence to keep this case on a track to trial. So we will appeal. Because the defendants have admitted their conduct took place outside of California, we intend to file suit in another state. We will also continue to try to unseal the pleadings in this case so that the public and press can review the underlying facts – and make their own determination whether Goldman and Merrill manipulated the market in our stock."Patrick Byrne, Chairman and CEO of Overstock.com, stated, "This is a setback, but we have always said we are in this case for the long haul. Until at least twelve Americans have had a chance to issue their own ruling on these facts, we will carry on." At hearing, last Thursday, counsel for Overstock.com reviewed Defendant's extensive "in California" conduct including evidence showing:
- A large percentage of the trades that were part of the manipulative scheme, both equities and options, were effected by all Defendants on the Pacific Coast Stock Exchange, which was located in San Francisco.
- Merrill Lynch Professional Clearing Corporation's San Francisco office played a significant role in the fraud. The head of that office actively worked with Merrill's senior management to create the policies and procedures to further the conduct, communicated five to six times a week with one of the lead traders involved in the manipulative naked short-selling of millions of shares of Overstock.com, financed the manipulative trades, prearranged with the trader a plan to allow the trader to fail (not settle) all its Overstock trades, and also worked with clients to avoid being forced to settle naked short-selling transactions thorough "wash" or "matched" trades.
- Goldman Sachs purchased a type of "conversion trades" that were part of the manipulative scheme which were cleared by Merrill Lynch Professional Clearing Corporation in San Francisco, and which trades were effected on the Pacific Coast Stock Exchange in San Francisco.