Overstock and Merrill Lynch settle for $20 million
03 February 2016 California
Image: Shutterstock
Overstock.com has ended its long legal battle with a group of broker-dealers after securing a $20 million settlement from the remaining defendant.
Merrill Lynch Professional Clearing Corporation was the last defendant standing in the litigation over allegations of naked short selling, which were first brought in 2007. Merrill Lynch agreed to pay $20 million to Overstock and co-plaintiffs on 28 January to settle the claims, without admitting any liability.
Overstock CEO Patrick Byrne and a group of shareholders brought the litigation against 11 broker-dealers in California, claiming they engaged in naked short selling that drove down the retailer’s share price and hindered capital raising efforts.
The retailer settled out of court with all of the defendants, except Goldman Sachs and Merrill Lynch.
The case against Goldman Sachs was eventually dismissed due to a lack of jurisdiction, but Overstock filed a fresh case in New Jersey, making racketeer influenced and corrupt organisation (RICO) allegations and accusing the bank of securities fraud.
Goldman Sachs agreed to settle the new action out of court, admitting no liability.
The financial terms of that deal were not disclosed, although Goldman Sachs did pay $15 million to settle with the Securities and Exchange Commission in January this year over allegations, which it did not admit, that its broker-dealer improperly provided locates for short selling.
Announcing Overstock’s $20 million settlement with Merrill Lynch, Byrne commented: “Though I am under no obligation to say so, I want to make clear that Bank of America had nothing to do with the behaviour documented in this case. Even with Merrill Lynch, the individuals at issue are no longer employed there. I do not feel like bayonetting any more of Wall Street’s wounded today.”
Bank of America, on behalf of Merrill Lynch, and Goldman Sachs declined to comment on their settlements with Overstock.
Merrill Lynch Professional Clearing Corporation was the last defendant standing in the litigation over allegations of naked short selling, which were first brought in 2007. Merrill Lynch agreed to pay $20 million to Overstock and co-plaintiffs on 28 January to settle the claims, without admitting any liability.
Overstock CEO Patrick Byrne and a group of shareholders brought the litigation against 11 broker-dealers in California, claiming they engaged in naked short selling that drove down the retailer’s share price and hindered capital raising efforts.
The retailer settled out of court with all of the defendants, except Goldman Sachs and Merrill Lynch.
The case against Goldman Sachs was eventually dismissed due to a lack of jurisdiction, but Overstock filed a fresh case in New Jersey, making racketeer influenced and corrupt organisation (RICO) allegations and accusing the bank of securities fraud.
Goldman Sachs agreed to settle the new action out of court, admitting no liability.
The financial terms of that deal were not disclosed, although Goldman Sachs did pay $15 million to settle with the Securities and Exchange Commission in January this year over allegations, which it did not admit, that its broker-dealer improperly provided locates for short selling.
Announcing Overstock’s $20 million settlement with Merrill Lynch, Byrne commented: “Though I am under no obligation to say so, I want to make clear that Bank of America had nothing to do with the behaviour documented in this case. Even with Merrill Lynch, the individuals at issue are no longer employed there. I do not feel like bayonetting any more of Wall Street’s wounded today.”
Bank of America, on behalf of Merrill Lynch, and Goldman Sachs declined to comment on their settlements with Overstock.
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