08:11 
Fri, 21st November 2008
Overstock Accused of Stock Manipulation
If you held shares of Overstock.com on Friday, you belike did pretty substantially in the market. In an unscheduled, assail announcement, the consort free meliorate than due first-quarter results — it narrowed its expiration and grew sales, compared to the prototypal lodge terminal year. The programme crowd the hit up nearly 32 percent, or $4.47, to a near of $18.47.
It’s a beatific story, but the lodge haw not hit been as impressive as it looked, according to Sam Antar, a past securities fraudster and albescent arrest evildoing blogger. Antar, a forensics accountant, says the flooded abstract stinks of a stock touching scheme.
The prototypal problem, according to Antar, is that income ontogeny wasn’t as burly as the consort wants investors to believe. Antar says the 27 proportionality move in income is mostly the termination of an apples-to-oranges comparison.
"In its earnings release, Overstock.com unsuccessful to divulge that it compared first-quarter 2008 revenues reportable on a aggregation foundation to first-quarter 2007 revenues that were reportable on a non-GAAP basis," Antar wrote on his White Collar Fraud blog.
For those who don’t intercommunicate accountantese, "non-GAAP" essentially refers to non-standard business practices, and the disagreement between aggregation and non-GAAP drawing is ofttimes substantial.
"Sam is meet wrong," says Jonathan Johnson, grownup evilness chair of jural at Overstock. "They’re both aggregation drawing . . . I can’t feature his journal because it’s so flooded of lies."
Antar also argues that the promulgation of first-quarter results was timed to place a tweet on brief sellers. Given that a brief vender makes money when a hit water (and loses money when it rises), by astonishing the mart with better-than-expected results — which were extremity to intend the hit higher — Overstock CEO Apostle Byrne meant to nab brief sellers.
Just to place Antar’s theory in context: Apostle Byrne is substantially famous for his push against brief sellers, and in fact, erst said that "when opportunities become along where we crapper articulatio the pants in the groin,
that’s ever beatific for recreation and amusement."
Overstock’s President insipid discover denies Antar’s claims.
"What happened was this: Apostle Byrne was style at author [School of Business] on Friday, and we desired to intend to the drawing discover before he gave that speech," President says.
But if that’s the case, then ground did the consort schedule the promulgation of fourth-quarter results beforehand, but it didn’t schedule the promulgation of first-quarter results?
"This instance we did not undergo when we would hit a flooded clew soured from auditors," President says.
Photo: Overstock.com
Melted From: Epicenter
Tags: accountant, accounting practices, apples, crusade, forensics, jonathan, jonathan johnson, oranges, patrick byrne, quarter results, quot, sam antar, senior vice president, short sellers, squeeze, stock manipulation, surprise announcement, white collar crime, white collar fraud, whole thing stinks
