Although this ruling really does not shed any light on merits of the case, it will be interesting to see how this situation develops...
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Overstock.com Wins Ruling in Prime Brokerage Litigation
Wednesday July 18, 10:53 am ET
Court Gives Overstock.com the Okay to Proceed and Denies Prime Brokerages Attempts to Derail Exposure
SALT LAKE CITY, July 18 /PRNewswire-FirstCall/ -- Overstock.com, Inc. (Nasdaq: OSTK - News;
http://www.overstock.com) announced today a favorable ruling in the lawsuit pending in the Superior Court of California, County of San Francisco against most of the largest prime brokerage firms in the country, including Morgan Stanley & Co. Incorporated, Goldman Sachs & Co., Bear Stearns Companies, Inc., Bank of America Securities LLC, Bank of New York, Citigroup Inc., Credit Suisse (USA) Inc., Deutsche Bank Securities, Inc., Merrill Lynch, Pierce, Fenner & Smith, Inc., and UBS Financial Services, Inc.
On July 17, 2007, Judge John Munter of the California Superior Court for the City and County of San Francisco ruled that Overstock and it co-plaintiffs have stated viable claims for market manipulation under California securities law, for common law claims for conversion and trespass to chattels, as well as for injunctive relief under California's Unfair Business Practices Act against the defendant prime brokerage firms based on those defendants allegedly executing naked short sales of the stock of Overstock with the intent of manipulating the market price for the shares of those companies' stocks. In addition, the Court granted Overstock (and its co-plaintiffs) leave to amend other of their claims for restitution under the Unfair Business Practices Act and for the common law claim of interference with advantage, to more specifically plead the factual basis of these claims.
In so ruling, Judge Munter rejected defendants' claims that Overstock's complaint is preempted by federal law and that 'phantom' shares are not created by naked short selling of a company's stock as a matter of law.
"This is a huge win for us," said Jonathan Johnson, Overstock Senior Vice President of Legal. "We are eager to start discovery and move this case to trial. The day we expose in detail the defendants' misconduct to a jury will be a good day for Overstock, its shareholders and the capital markets."
"As I listened to defendants' counsel argue that phantom shares don't exist because the SEC says they don't exist," said Patrick Byrne, Overstock Chairman and Chief Executive Officer, "I was reminded of Abraham Lincoln's favorite joke: 'If you call a tail a leg, how many legs does a dog have?' 'Five?' 'No, four -- because calling a tail a leg doesn't make it a leg.' Defendants create phantom shares by facilitating naked short selling and other types of trades which result in failures-to-deliver. This is manipulative and illegal -- regardless of what the industry's all-too-cozy regulatory agency says. The battle to clean up Wall Street is only going to be won when it is brought to a jury of 12 Americans. Today was a giant step towards that goal."
The suit alleges that the defendants, who control over 80% of the prime brokerage market, participated in a massive, illegal stock market manipulation scheme and that the defendants had no intention of covering such orders with borrowed stock, as they are required to do, causing what are referred to as "fails to deliver." The suit also alleges that the defendants' actions caused and continue to cause dramatic distortions with regard to the nature and amount of trading in the company's stock which have caused the share price of the company's stock to dramatically drop. The suit asserts that a persistent large number of "fails to deliver" creates large downward pressure on the price of a company's stock and that the amount of "fails to deliver" has exceeded the company's entire supply of outstanding shares. The company is seeking damages of $3.48 billion."
http://biz.yahoo.com/prnews/070718/law077.html?.v=101
OSTK - Overstock (Naked Short Litigation)
and... "Well, crap- gimme somethin- immunity or somethin!":mad: "Fool!- i can't give you immunity- do i look like a prosecutor to you??LOL"
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