January 7, 2021
A Utah federal judge on Wednesday vacated his September dismissal of a putative class action against online retailer Overstock.com, saying it was a “mistake” that he “overlooked” a footnote in the investors’ opposition seeking permission to file an amended complaint if the court dismissed the suit.
U.S. District Judge Dale A. Kimball had granted the motions to dismiss the allegations that the company lied about its future finances and issued digital token dividends to punish short sellers.
While Overstock.com argued the amendment would be futile, Judge Kimball on Wednesday granted investors’ Oct. 23 request to file an amended consolidated complaint — which was attached as an exhibit and includes new evidence that investors say shows the company and its executives knew the scope of its financial issues.
Lead plaintiff Mangrove Partners Master Fund alleges Overstock and its executives hid the financial condition of its retail division by repeatedly revising its retail earnings guidance upward.
Overstock and former and current company executives — founder and former CEO and director Patrick Byrne; former Chief Financial Officer Gregory J. Iverson; and David J. Nielsen, Overstock’s retail division president — are named in the September 2019 suit.
Investors allege the home goods online retailer and its executives didn’t disclose the company’s failure to get director and officer liability insurance and misrepresented the purpose of a digital dividend that hurt short sellers.
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