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SEC Ends Gradient Probe

No enforcement action is recommended.
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Updated from 9:56 a.m. EST

Gradient Analytics said the

Securities and Exchange Commission

has terminated its investigation of the research firm and recommended that no enforcement action be taken.

The SEC informed Gradient of its decision this week in a letter from the agency's San Francisco district office.

"We stand by our research," Gradient Analytics President and CEO Brad Forst said in a statement Wednesday. "Independent and objective research may be unpopular with some companies, but it is vital information in the equities market."

The SEC began its investigation after

Overstock.com

(OSTK) - Get Overstock.com, Inc. Report

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, an Internet retailer, filed a lawsuit against Gradient and others, alleging stock market manipulation.

Additionally, the government had asked Gradient for information related to its analyst reports on

Biovail

(BVF)

, a Canadian pharmaceutical company that also filed a lawsuit against Gradient and other defendants.

Overstock alleged that Gradient was working with short-sellers, including a former shareholder of

TheStreet.com Inc.

(TSCM)

, publisher of this Web site, to drive down its stock price.

TheStreet.com and James J. Cramer, its co-founder and major shareholder, were subpoenaed last February in connection with the SEC investigation of Gradient.