Overstock wants a Utah District court to dismiss a lawsuit accusing them of making false claims as well as manipulating the price of $OSTK. On May 12, Overstock lawyers from Parsons Behle & Latimer filed a motion to dismiss plaintiffs’ consolidated complaints, and Overstock, as well as their legal team, are waiting for the court’s decision.
A class-action lawsuit was filed against Overstock on September 27, 2019. Benjamin Ha, the lead plaintiff in the lawsuit, claims that Overstock made misleading year-end predictions in 2017 as well as manipulated its stock price by distributing a digital dividend with the intention of creating an artificially short squeeze.
The lawsuit says that Overstock made deceptive claims regarding the profitability of its security token tZERO and that the company manipulated the price of $OSTK by announcing a digital dividend to wipe out short-sellers.
As a result of both the profitability claims and the announcement of the digital dividend, $OSTK rocketed. $OSTK shares rose over 30% in October 2017; this market move allowed former Overstock CEO and Chairman Patrick Byrne to sell his $OSTK shares at a premium—before the company announced that their previous year-end prediction was inaccurate which caused the $OSTK price to plummet throughout 2018.
Overstock files motion for dismissal
When it comes to Overstock’s “misleading statements” lawyers are looking to have those allegations dismissed because “quintessential forward-looking statements [are] protected by the [Private Securities Litigation Reform Act]’s safe harbor,” said Overstock lawyers in their court filing.
Overstock’s lawyers claim that the company is allowed to make forward-looking statements about their business because there is a legal framework that allows them to do so.
In regards to the allegations regarding Overstock manipulating their stock price: “There is no allegation that Overstock misrepresented the nature of the Dividend, or sought to hide the impact it would have on short sellers. In fact, Plaintiff concedes that the impact was widely known and reported from day one. This alone warrants Dismissal.”
The lawyers argue that the press made the impact of Overstock’s digital dividend clear from the day it was announced, claiming that it was well known what sort of effect the dividend would have on short sellers.
Overstock has had a rough journey in the equities market since the start of 2018 but is up 146% year to date. Now, we will wait and see what the court decides and if that decision has any impact on $OSTK.
New to blockchain? Check out CoinGeek’s Blockchain for Beginners section, the ultimate resource guide to learn more about blockchain technology.