Hedge funds have been practicing a tactic called “naked short selling”, which means selling the same piece of property several times over such as shares in companies like Overstock.com.
Patrick Byrne has been fighting an ongoing crusade against the hedge funds and stock market speculators that use these tactics, since his shares went into freefall 18 months ago. He argues that speculators are using dubious tactics to drive down his company’s share price unfairly.
Naked short selling, or naked shorting, is a controversial form of selling shares of securities short. Some forms of naked short-selling are legal and some are not. The controversy has surrounded naked short-selling aimed at profiting from share price declines.
As Overstock.com’s founder and chief executive, Byrne told the Herald that he is willing to consider yanking his company from the stock market altogether through a management buyout worth well over half a billion dollars.
“Management is certainly reviewing all such options open to us,” he said. “If the right…fund or buyout firm came along and wanted to be our partner, it is something we would look at.”
Byrne says as it is, nearly four Overstock shares have been promised for sale for each real one in public hands. Which has caused a share price collapse when the people who think they own the stock will find they only have an IOU.
This practice discourages the smaller, entrepreneurial companies from coming to the stock market.
Byrne says the Securities & Exchange Commission should have a closer look at these tactics and put a stop to it, he said, “The shorts (speculators) are very tight with the people in the Department of Justice, the SEC, the FBI… Canada, Caribbean…I think this leads back to organized crime in central and eastern Europe. This is all mobbed up.”
Patrick Byrne received a bachelor’s degree from Dartmouth College, a master’s degree in philosophy from Cambridge University as a Marshall scholar, and a doctorate in philosophy from Stanford University.
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