Online retailer Overstock.com said it has received a notice from the SEC informing the company that it is again under investigation for its financial restatements.
The subpoena accompanying the notice covers documents related to its restatements in 2006 and 2008, and also to Overstock's billings to its partners in the fourth quarter of 2008 and related collections, as well as Overstocks accounting for and implementation of software relating to its accounting for customer refunds and credits, including offsets to partners, and related matters. Overstock said it intends to cooperate fully with the investigation.
All of the matters that are the subject of the subpoena have been thoroughly disclosed and we are disappointed, given the extensive public disclosures Overstock has previously made, that the SEC, given all of the challenges it faces, has apparently chosen to expend time and resources on another investigation of Overstock, said Overstock.com chairman and CEO Patrick Byrne in a statement. Rest assured, I will continue to speak out as I have on the shortcomings of our financial regulatory system.
Research firm Audit Integrity gave the company a very aggressive rating in its Accounting and Governance Ratings for nine of the prior 11 quarters. In February 2006, the firm noted, Overstock filed restatements going back to 2002 due to incorrect accounting for freight costs. In May 2006, the SEC subpoenaed documents covering Overstocks accounting policies, financial estimates and communications relating to analysts, among other items. Byrne has accused some financial analysts and journalists of working with short-sellers to drive down his companys stock price.
In June 2008, the SECs Salt Lake City district office announced that it had completed its investigation of Overstock and did not plan to recommend taking any enforcement action against the company or its officers. Later that year, in October, Overstock filed restatements for fiscal 2003-2007 and the first two quarters of 2008. The company blamed the restatements on an upgrade of its Oracle accounting system in 2005 that failed to properly record some transactions. As a result, Overstock reduced its revenue over the five-year period by $12.9 million and widened its cumulative loss by $10.3 million.
