Excess inventory retailer Overstock.com Inc. announced that the Securities and Exchange Commission has issued the company a subpoena requesting information on accounting policies, targets and projections.
A day later, the Salt Lake City-based company announced that it would cancel a $16.8-million sale of its common stock planned for midweek.
Earlier this year, Overstock said that it would restate its financial results back to 2002 to correct how it accounted for freight costs. Those restatements came amid an SEC investigation into allegations by Overstock that stock-research firm Gradient Analytics Inc. issued negative reports on the company in exchange for payments from a hedge fund.
Overstock.com said that the SEC subpoena also requested further information on the company's claims against Gradient. The Gradient case made headlines earlier this year, when the SEC's San Francisco office issued subpoenas to two business columnists and was rebuked for not having approved the measure through SEC Chairman Christopher Cox. Gradient has denied any wrongdoing.
In a statement, Overstock.com chairman and chief executive Patrick Byrne said that he might be the first executive to celebrate receiving an SEC subpoena."In truth, I am gratified to see that the SEC is looking into the issues about which I have been speaking: I believe our capital markets are broken in a deep way, our system of corporate voting and governance is a hoax, the savings of Americans are being drained through our financial system's fissure of unsettled trades and [that] the system appears to be cracking around Overstock.com," Byrne said in his statement. "While some of the miscreants file frivolous delaying motions and others schmooze with hedge funds ... [I] applaud the SEC's actions and eagerly anticipate my chance to get these issues into court."
