Share prices for Utah-based Overstock.com dipped to a seven-year low last week after the online retailer said federal investigators want information on current and former executives, including recently departed CEO Patrick Byrne, an eccentric millionaire who has warned that the government is out to get him.
In filings coinciding with the Midvale-based firm’s latest earnings report, Overstock officials said the Securities and Exchange Commission had subpoenaed documents related to a digital dividend offered to shareholders, announced in June and later postponed.
That request followed on an initial probe by the SEC in February 2018 into tZero, the Overstock-owned cryptocurrency firm that was to offer the dividend.
The latest Oct. 7 subpoena also goes after stock trading plans for top Overstock officers and executives, the company reported, seeking details on transactions between January 2018 and early last month.
The agency has also asked about communications between its executives and Byrne, who left the firm in August, Overstock said — and it wants more information on the company’s dealings with GSR Capital, a Hong Kong-based private-equity firm that had considered a substantial investment in Overstock and tZero.
OSTK shares dipped last Wednesday to $7.65 — their lowest since late-July 2012 — before inching upward to close last week at $8.33. The online discount home-goods retailer, founded in 1999, had traded at $84 in early January 2018.
In a conference call last Tuesday with market analysts, new Overstock CEO Jonathan Johnson said the company was cooperating fully with SEC investigators.
“Of course, we hope the SEC will be satisfied with what we’ve provided and move on from its inquiry,” Johnson said. “Obviously, I cannot assure you the commission will do so, nor can we know the timing as to any decision the SEC may make on these matters.”
In its earnings disclosures, the firm said it had “incurred significant legal fees and other expenses” tied to the SEC actions — and could see additional legal fees, expenses “or fines or other penalties” from the ongoing investigation.
A spokesman for the SEC said Friday that the commission does not confirm or deny ongoing investigations and declined to comment.
Under Byrne’s leadership, Overstock had invested aggressively in recent years in firms specializing in aspects of blockchain, a digital-ledger technology that the former CEO has predicted will revolutionize capital markets and other aspects of society. Company leaders have sought to sell off the firm’s retail division.
Byrne resigned Aug. 22 after he acknowledged having a romantic affair with alleged Russian spy Maria Butina — at the direction, he has said, of federal law enforcement officials.
Butina was imprisoned after pleading guilty late last year to conspiring to act as an unregistered foreign agent. She has since been released and, according to news reports, has returned to Russia.
Byrne, a 56-year-old millionaire, has claimed his affair with Butina and his experience as an FBI informant made him privy to damaging details of a “deep state” conspiracy within top echelons of the U.S. government, ostensibly involving political espionage against Donald Trump, Hillary Clinton and others.
Byrne said at the time he was stepping down to distance Overstock from potential retaliation over his allegations, but has since claimed in a series of blog posts he was squeezed out by Overstock’s corporate leadership.
Before his departure, Byrne had laid the groundwork for the company’s upcoming stock dividend to be paid in the form of a digital security, to be listed on Overstock subsidiary tZERO’s trading platform.
Those plans were later withdrawn, in a move the company said at the time was meant to allay concerns over its liquidity and to resolve challenges over how newly issued shares in the company would be traded.
Overstock has since decided to let shareholders vote on the digital dividend.
In September, meanwhile, Byrne sold off his remaining stake of more than 4.7 million shares in the firm, worth an estimated $90 million, in a series of transactions that have since drawn criticism over their timing.
The stock trading plans sought in the SEC’s Oct. 7 subpoena are meant to document pre-planned sales and purchases of stock by company officials and are designed to prevent executives from trading on insider information.
Bryne said shortly after he sold his stake that he was investing the proceeds in gold, silver and several types of cryptocurrency to protect against a crash of U.S. financial markets as well as potential “acts of retaliation” from government officials over his “deep state” claims.
Byrne and the company are now the target of several lawsuits by shareholders.
Attempts by The Salt Lake Tribune to reach Byrne for comment have been unsuccessful.
According to information the former CEO has offered in regular updates to his blog, deepcapture.com, he has been traveling in Indonesia — a country, he has noted, that does not have a criminal extradition treaty with the United States.