Gradient Scores Huge Victory in Court Against Overstock.com

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COURT RULES THAT GRADIENT ANALYTICS’ CROSS-COMPLAINT MAY PROCEED AGAINST OVERSTOCK.COM, INC. ON ALL COUNTS
AMENDED CLAIMS TO BE FILED AGAINST OVERSTOCK CEO PATRICK BYRNE

Scottsdale, July 10, 2008

Gradient Analytics, Inc. announced today that the Marin County Superior Court has ruled in the case of Overstock.com, Inc., v. Gradient that all of Gradient’s cross-claims against Overstock (NASDAQ:OSTK), including claims for defamation, intentional interference with prospective economic advantage, and unfair business practices, may proceed, thereby rejecting Overstock’s challenge to certain of those claims. Continue reading

Gradient issues negative report on UTStarcom in 2003; SEC files fraud charges against UTSI in 2008

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SCOTTSDALE, Ariz. – (Business Wire) Five years after Gradient Analytics first reported on UTStarcom (UTSI), the U.S. Securities and Exchange Commission has announced accounting fraud charges and a settlement fine against two UTSI executives for “false financial filings.”

Gradient Analytics initiated coverage of UTSI on Sept. 25, 2003, after finding that “insider selling activity ha[d] ballooned” at a time when the company was reporting “extremely high accruals… and anemic cash flows.” Gradient’s report also noted that, “despite a 77.4% increase in earnings, UTSI’s operating cash flow declined over 300% in the six months ended 06/30/03.” Continue reading

Gradient Analytics Looks Forward to Proving Overstock Wrong

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Case Essential To Protecting Analysts From Issuer Retaliation

SCOTTSDALE, Ariz.–(BUSINESS WIRE)–Gradient Analytics, Inc. said today that a California state court has ruled that discovery may proceed in the Overstock.com vs. Gradient, et al. litigation. Discovery had been stayed for several months while motions to dismiss by several parties were pending. The motions to dismiss (which did not involve Gradient) were filed by four current and former Overstock board members who had been sued in a cross-complaint filed by Rocker Partners (now known as Copper River Partners).

In response to the court’s decision allowing discovery to go forward, Gradient Analytics President and CEO Brad Forst today noted that: Continue reading

A bit of irony from Patrick Byrne, CEO of Overstock.com

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Wacky Patty ByrneRecently a countersuit was filed by Gradient Analytics against Overstock.com (NASDAQ:OSTK) and Patrick Byrne, claiming that the company and Byrne engaged in a smear campaign after negative reports on Overstock were issued by Gradient. The suit includes allegations that Overstock and Byrne committed acts of defamation, tortuous interference with prospective business relations, and unfair business practices.

Gradient President and CEO Brad Forst said: Continue reading

Gradient Analytics’ Early Research Identified Same Issues as Charges in SEC Complaint against Biovail

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SEC Credits Analysts Who Questioned Biovail, But Retaliation Against Independent Researchers Through Lawsuits Continues

SCOTTSDALE, Ariz.–(BUSINESS WIRE)–Gradient Analytics said recently its research into Biovail from 2002 to 2003 identified the same issues that are now the centerpiece of the accounting-fraud charges supporting the U.S. Securities and Exchange Commission complaint against the pharmaceutical company. The SEC’s complaint confirms the validity of Gradient’s critical analysis of Biovail but raises serious questions about how companies retaliate against analysts with threats, intimidation, and lawsuits.

The SEC yesterday announced accounting-fraud charges and a $10 million fine that Biovail agreed to pay. In 2006, Biovail sued Gradient, alleging that its critical analysis caused company stock to drop. The SEC investigated both Biovail and Gradient. In February 2007, the SEC terminated its investigation of Gradient and recommended no enforcement action. Continue reading

Suing Short Sellers Who Publish Negative Reports

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Reuters published an interesting article about lawsuits against short sellers… like when Overstock sued Gradient Analytics and Rocker Partners.

“Short sellers” profit when a company’s stock price goes down. Negative information about companies tends to send the stock price down, so you can see the potential correlation here… short sellers benefit when negative information is made public.

David Rocker, retired general partner of Rocker Partners, discussed his lawsuit experience with Overstock.com. He was accused of purposely trying to push the stock price down. Continue reading