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August 20, 2005
Rocker Partners and Gradient Analytics sued by Overstock.com
Overstock.com, which is an online retailer has alleged that Hedge Fund Rocker Partners has been indulging in illegal shorting of it's stock. This has led to a nosedive of share value from $77.18 in Jan 2005 to $45.43 now. This has resulted in massive losses for the firm. When hedge funds indulge in short selling, it implies that the firm is selling borrowed stock with the intent of buying it back later at a lower price. This helps them to make profits due to the drop in stock price. Generally this is done when the fund feels that the shares are overvalued and will return to its fair price. Overstock.com alleges that research firm, Gradient Analytics has aligned itself with Rocker Partners some time back. At the insistence of Rocker Partners, the research firm withheld negative information about the company and published it with a time gap. This gap allowed the hedge fund to make adjustments in its portfolio leading to a virtual downpour of shorting of its shares. This activity is being seen as an illegal act of killing the company. Momey.cnn.com reports:
"Gradient had been publishing negative reports on Overstock.com for months before Rocker became a client, however, according to a report in The New York Post, which cited a person familiar with the situation."
Read More: Overstock.com sues hedge fund
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