As most of you know by now, in the bizarre world of Overstock.com (Nasdaq: OSTK) CEO Patrick Byrne, stuff that would seem like a setback to another CEO -- say, an SEC subpoena into the company -- is cause for celebration. Don't act so surprised. This guy has long bragged that, although his company is a cash incinerator, it didn't torch as much as Amazon.com (Nasdaq: AMZN).
That said, the celebration of Overstock's latest piece of grim news has been decidedly muted -- if by "muted," you mean "suspiciously devoid of disclosure." In a tersely worded press release yesterday, Byrne announced the departure of director and audit-committee chair Ray J. Groves. Oddly, the most transparent CEO in America didn't bother to give a reason.
Luckily for fans of real transparency -- rather than the make-believe type Byrne practices -- a later SEC filing contains a bit more truth. In it the three-sentence letter, Groves says, "My resignation relates to the Company's prime broker suit." That was the same explanation Overstock gave for the resignation of John Fischer earlier this year.
As you recall, Byrne (and his naked-shorting fan club) believe that Overstock can squeeze a few billion out of the nation's prime brokerage firms, including Morgan Stanley (NYSE: MS), Goldman Sachs (NYSE: GS), Bank of America (NYSE: BAC), and others. Byrne alleges that they're part of a vast conspiracy to allow "naked shorts" to destroy his company. Whether or not this conspiracy is separate from Byrne's other alleged conspiracy (involving widespread payoffs to financial journalists to criticize his company) depends on the day of the week.
This week's news is just another confirmation that his directors are beginning to believe, as I have long suggested, that Byrne is nuttier than my Aunt Betty's fudge-ums. Or maybe these directors (both members of the audit committee) don't want to be held liable for any allegations of accounting shenanigans. Or perhaps they don't want to be sued for the batty behavior of Byrne's bizarre cyberstalker-slash-director of communications, Judd Bagley.
The bottom line is that directors, including Byrne's own father -- the first one to hit the exits -- don't see any reason to stick around at Overstock. Why would investors?
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At the time of publication, Seth Jayson had no positions in any company mentioned here. Investors who listened to his first warnings about Overstock could have saved themselves a 62% loss. See his latest blog commentary here. View his stock holdings and Fool profile here. Fool rules are here.
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