April 21, 2024

Investors blamed Overstock and its former CEO Patrick Burn for securities fraud

Investors in retail giant Overstock.com have launched a class action lawsuit blaming the company itself.its former CEO Patrick Byrne and CFO Greg Iverson in securities fraud. The Block writes about this.

In a lawsuit filed on September 27 with the Federal CourtUtah states that, after a long period of time during which Overstock suffered financial losses, the company came up with a new initiative, which involved making a profit in new cryptocurrency markets.

According to the plaintiffs, despite the difficult financial situation of the company, Patrick Burn spent at least 220 days a year over the past few years, speaking with his “blockchain sermons”.

As a matter of fact, investors are unhappy with the new schemedividend payments to Overstock shareholders under the name tZERO Dividend. It was based on digital assets released on the tZERO subsidiary blockchain platform.

In July, shareholders were also offered a specialthe type of dividend (Digital Voting Series A-1 Preferred Stock) that was supposed to be traded on tZERO. However, as it turned out in practice, in addition to the extremely risky “short squeeze” strategy, investors could not resell the shares for six months from the start of the dividend.

As an example, the lawsuit describes the followingsituation: on September 13, stocks were trading at $ 26.89, but on September 18, after three trading days, investors learned about the upcoming “short squeeze” and price reduction to $ 15.50.

Against this background, the news thatthat last week, Patrick Byrne sold all his Overstock shares, earning them a little less than $ 100 million. At the same time, he accused government agencies of conspiring with major Wall Street players to artificially lower the company's stock price.

For Berne himself a class action lawsuitinvestors became another unpleasant blow in a series of events that followed his resignation from CEO Overstock in August. Recall that this decision was made by Bern in the light of the scandal with the Russian spy Maria Butina, with whom he had had a romantic relationship for several years.

Shortly after the tZERO platform, a number of investors left.