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— Byrne claimed that the agency did not initiate the investigation of journalists at his behest. But Greenberg rejoins, "They wouldn't be investigating if he hadn't stirred the pot.

"This guy [Byrne] is trying to distract people from the reality of his business," says Greenberg. "Performance is getting worse and worse." If he gets away with what he is trying to do in the civil suit and with the Securities and Exchange Commission, "He will silence critics, independent analysts, and the press." Investors and the entire capital markets will be the losers.

Byrne released to the media affidavits by three former Gradient employees. Greenberg says they were shot full of errors. For example, he never wrote about Overstock while he was with TheStreet.com. He hadn't even heard of Vickrey and Gradient until he joined MarketWatch in April 2004.

Other companies are sniffing out conspiracies in the same places. Last month, Biovail, a Canadian drugmaker whose accounting was earlier probed by the securities commission, sued Gradient and a different hedge fund alleging the same kind of collusion.

Vickrey's lawyers won't let him talk, but Gradient has called the Overstock and Biovail claims false and malicious and says the research firm's ex-employees who gave the affidavits were fired for cause. As usual, the securities commission isn't talking about its investigation. Vickrey is "very smart, very good -- like a Boy Scout," says Greenberg, who continues to use Gradient research.

One person who is tired of Patrick Byrne is his father, John "Jack" Byrne, a respected insurance executive who is chairman of Overstock. The elder Byrne, noting that his son has been on a jihad against analysts, hedge funds, and the press, told Dow Jones, "I wish Patrick would use the time he spends on the jihad to pay attention to the details of the business." The company has never made a profit since going public in 2002. The elder Byrne may resign from Overstock.

Return to City Lights main page.

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