Rocker Fires Back at Overstock

The hedge fund says it plans to countersue.
Author:
Publish date:

Updated from 12:12 p.m. EDT

The sparring continued Thursday between

Overstock.com

(OSTK) - Get Report

and the New York hedge fund it accused of illegally conspiring to drive down its shares.

In a statement, Rocker Partners said it plans to countersue Overstock, alleging that recent media appearances by Chief Executive Patrick Byrne amount to a "smear campaign" that potentially injured Rocker's business reputation.

"We believe that by failing to rein in the erratic behavior of Overstock's CEO and tacitly endorsing both his frivolous lawsuit and his increasingly outlandish public attacks on the Rocker parties, the board should be held accountable for the consequences of Dr. Byrne's actions, and we plan to make the board answer for its conduct in court," the hedge fund said in a release.

Rocker Partners owns about 8% of

TheStreet.com

(TSCM)

, the publisher of this Web site.

Jonathan Johnson, the senior vice president for corporate affairs at Overstock, said the company expected countersuits when it filed its own complaint.

"The suit we brought is meritorious and we'll win," Johnson said. "Regardless of who he countersues he'll lose."

Last week, Overstock filed a lawsuit in California accusing Rocker Partners of spearheading a campaign to drive down the company's share price by helping to promulgate tainted stock research and manipulating various press organs (including, at times, this one) and other entities. The suit named David Rocker, his fund and various employees, as well as Gradient Analytics, a research outfit Overstock implied was in league with the short-sellers.

The suit alleges unfair business practices and negligence and alleges that Gradient's research reports were "simply platforms for the Rocker defendants to pursue its investment agenda of having Overstock's share price being kept as low as possible."

In a subsequent conference call and two

CNBC

interviews, Byrne claimed a short-selling conspiracy had been carried out against his company at the behest of "one of the master criminals of the 1980s" who was "supposed to end up with our company." He declined to name the figure but likened him to the "Sith Lord" of

Star Wars

renown.

In its release Thursday, Rocker Partners called the suit frivolous.