John Murphy, the Overstock shareholder who sued the company last year, is now seeking official records to establish foul play in connection with the departure of its former CEO Patrick Byrne.
As reported by Law360 on Wednesday, Murphy is seeking the records under Section 220 of Delaware's General Corporation Law to examine Overstock’s directors’ roles in connection with Byrne’s departure and to check if there were any violations in the regulations.
“This action seeks corporate books and records to investigate Byrne’s and the board’s role in what appears to be a scheme to cause a so-called ‘short squeeze,’ resulting in Byrne’s sudden resignation from the company and sale of over $90 million of his stock,” the lawsuit stated.
A controversial exit
Byrne suddenly stepped down from the apex role in Overstock, an e-commerce giant in the United States, in August last year.
The controversy, however, initiated when Byrne published a filing mentioning that he sold his entire stake of 5 million Overstock shares worth $90 million. He was holding 13 percent of all the shares issued by the e-commerce giant.
He even stated that he moved to Indonesia, pointing out it is “a state without an extradition treaty with the United States.”
To secure his money obtained by selling Overstock’s shares from the reach of the authorities, he also made “investments that are counter-cyclical to the economy: Gold, silver, and two flavors of crypto.”
The lawsuit brought by Murphy alleged that Byrne was “engaged in a series of improper and potentially illegal actions while in the process cashing out over $90 million dollars in stock and fleeing the country.”
The suit previously also suggested the involvement of Overstock’s board members in Byrne’s actions.
“His misconduct not only triggered an investigation by, among others, the U.S. Securities and Exchange Commission, it contributed to the destruction of hundreds of millions of dollars of the company’s value,” the lawsuit stated.
