In a case originally heard in Marin County Superior Court, the Reporters Committee for Freedom of the Press has filed a friend-of-the-court brief asking that a state appeals court dismiss Overstock.com’s libel and unfair business practices lawsuit against a financial research publisher who wrote negative stories about the Utah-based company. According to the Salt Lake City Tribune, Overstock’s lawsuit claims the publisher, Gradient Analytics Inc., and a hedge fund colluded to deliberately drive down Overstock share prices in 2005 through “short selling” — a practice in which stock is borrowed and sold, with sellers betting they can buy back the stock and bank the difference when share prices fall. As Overstock’s price slid, the hedge fund’s profits rose. In March, Marin County Superior Court Judge Vernon Smith said the lawsuit should proceed, rejecting Gradient’s claims that Overstock had sued Gradient only to suppress its criticism of Overstock. The committee argues that if the lawsuit continues, the precedent will “punish those who offer serious financial opinions about the value of publicly traded companies….(and) may inadvertently chill investigations and oversight on businesses.” But the Salt Lake Tribune quotes Overstock CEO Patrick Byrne as saying Gradient and its supporters in the financial media are trying “to hide behind the skirts of the First Amendment.”

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