Overstock.com's interim CEO told Fox Business Network that Patrick Byrne’s controversial exit from the online retailer isn't linked to a nearly two-year investigation by the Securities and Exchange Commission into the company's new money-losing blockchain business.
In addition the SEC probe appears to be “almost dormant,” Jonathan Johnson, who took over for Byrne two weeks ago, Fox Business Network explained.
Byrne resigned last month, saying distraction and fallout related to his involvement in a Federal Bureau of Investigation Russian espionage probe made it difficult for him to lead the online retailer, Reuters explained.
Many investors were skeptical of Byrne’s reasoning and immediately pointed to public disclosures made by Overstock about what appeared to be a widening investigation by the SEC’s enforcement staff into Overstock’s new blockchain business, started by Byrne in 2018, to create a crypto stock market, Fox Business Network explained.
Johnson said that the SEC’s enforcement division hasn’t asked the company for information since December 2018, and that he recently met with the enforcement staff to put an end to the inquiry, Fox Business Network's Charles Gasparino reported.
The longtime Overstock board member said that neither the company nor any past or present executive has received a “Wells notice” from the SEC enforcement staff. A Wells notice is a document the SEC sends to people or firms when it is planning probable legal action for violating federal security laws, Fox Business explained.
“We haven’t had requests for information for almost a year,” Johnson told Fox Business. “We have spent a king’s ransom to process their requests for information to put this to bed.” Johnson believes that based on conversations he recently had with the commission the state of the investigation is “almost dormant.”
An SEC spokesman declined comment.
Byrne's resignation came just days after Byrne claimed in a statement that he had secretly been involved with the FBI, starting in 2015.
“While I believe that I did what was necessary for the good of the country, for the good of the firm, I am in the sad position of having to sever ties with Overstock, both as CEO and board member,” Byrne said in a resignation letter addressed to shareholders.
“It has been an honor to serve you through thick and thin, threats grand and arcane, for the past 20 years.”
In a letter to investors on Aug. 11, Byrne confirmed a report by Fox News contributor Sara Carter on her website here that he had a personal relationship with Maria Butina, a convicted Russian agent currently in a U.S. prison. Butina admitted to conspiring with a Russian official to infiltrate a gun rights group and influence U.S. conservative activists and Republicans.
In Byrne’s Aug. 11 letter, which referred to the “deep state,” he said that starting in 2015 he assisted federal law enforcement officials, whom he called “the Men in Black.” He said he was involved in probes “about political espionage conducted against Hillary Clinton and Donald Trump.”
A libertarian with a doctorate in philosophy from Stanford University, Byrne for over a decade has publicly battled short sellers targeting his company (OSTK) as it competes against larger rivals, including Amazon.com Inc (AMZN) and eBay Inc (EBAY). He is known for making brash and freewheeling comments.
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