(NOTE - just heard back, and Roddy declined to respond to my email question. Perhaps it is just me - maybe someone else can email him and find out what the source was, which attorneys he claims launched the investigation, whether Gradient was invested in any of the companies they were reporting on and if so, which ones...)
-----------
UPDATE - THE PLOT THICKENS:
I checked in with Dr. Byrne, and in his usual shy, waffling manner, he reluctantly commented on Roddy's claim that the SEC investigated Gradient/Camelback because of OSTK's lawyers pushing them to do so:
"The statement about OSTK in 2004 is a lie. 100% false."
And:
"I was completely indifferent to Gradientrash for many months, until the point in October they wrote a mocking and derisive piece on Gordon Macklin, at which point I told him, ""DONN –YOU MAKE A LIVING TOADYING TO BULLY HEDGE FUNDS. IN THIS ROLE YOU INSULTED MR. MACKLIN, A FRIEND, A LIFELONG MENTOR, AND A DECENT AND WONDERFUL MAN. YOU DESERVE TO BE WHIPPED, F**KED, AND DRIVEN FROM THE LAND. LITTLE PUNCTILIOUS SUBMISSIVE REJOINDERS SUCH AS YOUR LETTER CANNOT CHANGE THIS OR RECALIBRATE OUR RELATIONSHIP ON OTHER TERMS. YOU DREW FIRST BLOOD: OWN IT.
A statement of which I was, and remain, proud."
Kind of hard to misinterpret that, huh?
------------
Today, Roddy Boyd came out with an article in the NY Post, claiming that the three hedge funds run by Camelback were investigated in 2004, and cleared of any front-running charges. We are told that he knows this because of an individual involved in the investigation:
"After that, the SEC told Gradient that nothing troubling had been found and dropped the inquiry, an individual involved in the investigation said."
That raised some questions. As did this:
"The trading records of the funds revealed that contrary to front-running Gradient's research, the Pinnacle fund's biggest loss was in a long position in Impath, a former Nasdaq high-flier that was roundly criticized by Gradient for its accounting policies "
And this:
"In 2004, the same funds were accused of similar behavior by Overstock lawyers, prompting a three-month probe."
First, he cites "an individual involved in the investigations." Someone at the SEC, or someone at Gradient? Not that the defendants in two civil suits accusing them of impropriety would plant a story basically amounting to, "It's all a stinking lie." But one does wonder who is talking about SEC probes, given that the SEC doesn't discuss them. If Gradient, one has to ask, what is the veracity of the source? Is there independent corroboration for the claims?
Second, he claims that OSTK's lawyers drove the probe in 2004. Which lawyers? As far as I can gather, it wasn't O'Quinn's group, as they weren't involved with him then, nor was it the guys in Utah, as neither were they. So which lawyers? And how does he know?
I emailed Roddy this question, and hope to know soon - I will print the meat of the response if and when I hear back. (SEE ABOVE)
And third, the information about Gradient's funds' biggest loser is neat, but doesn't really address the question: Did it have positions in the companies it was bashing in its research reports? You know, companies like NFI, and TASR, and OSTK, and such? It doesn't really say, now does it? Call me skeptical, but doesn't that seem to answer a different question - what was your biggest loser - than the one that would seem the most relevant - were you in any of the companies you were putting out coverage on?
As to the no front-running thing, that is super, assuming that it is accurate. The question in my mind is twofold - were clients really told that Camelback claimed that it didn't run money, i.e. was truly independent, or not? If they were told they didn't run money, and they did, and further if Gradient is the source of this information about the SEC probe, one could reasonably ask, "If you were lying then, wouldn't it make sense that you are lying now?"
This whole saga has been more interesting than reality TV. We do have a lot of accusations that the defendants and those on the other side of the table from OSTK and Biovail are liars - the affidavits claim that they were lying to their customers when they claimed to not run money, and that they were lying when they represented their research as independent.
Yesterday, Dr. Byrne went on RobTV and point blank called Cramer a liar - said that he was lying when he said that he had never heard of Gradient/Camelback before he got the subpoena (and as discussed in prior blogs, that he apparently felt OK about selling a bunch of stock in TSCM, along with 3 other big insiders, before telling shareholders about the present from the SEC).
Dr. Byrne said that Cramer was a liar, and that there are emails on the CNBC servers that prove he was lying. He further said that the DTCC was run by a bunch of criminals, and that they were lying through their teeth.
That's a lot of lying.
So who is telling the truth?
We probably won't know for sure for a while, but we can look at some data points and try to guess.
First, the judge in Marin, after reviewing all the evidence, ruled that the case against Rocker/Gradient should move forward. That's a data point. We can try to determine who the source of this "information" on the SEC probe is - is it someone credible, or is it self-serving info tendered by Gradient? And who are the attorneys that asked for this probe, and how does Roddy know? And was Gradient telling their customers that they didn't run money, when they clearly did?
Learn the answers to those questions, and you will have a little more solid footing. Perhaps someone else can ask about the source of the info, and which attorneys, and whether he asked about the positions that Gradient did have, and whether they were telling their clients they were not running money, when it now appears that they were? I am running out the door, but will be back in a few hours, and am hopeful we can all get to the bottom of this...