Goldman Sachs, Merrill Lynch Accused Under RICO
By James West
December 19, 2010
Perrenial warrior against naked short selling and Overstock.com CEO Patrick Byrne has amended a previously filed lawsuit against Goldma Sachs and Merrill Lynch to include charges under New Jersey RICO laws.
The original lawsuit, filed in the California superior court in San Francisco, alleged that Goldman Sachs Group Inc and Bank of America’s Merrill Lynch unit engaged in a “massive, illegal stock market manipulation scheme” that involved so-called naked short-selling.
In naked short selling, short sales are executed but never delivered, thereby causing the company’s share price to fall.
“Merrill, Goldman and certain of their market maker clients agreed to and created a scheme to effect the naked short selling in Overstock securities that is the subject of this action, in order to perpetuate short selling and drive down the price of Overstock, to their mutual profit,” alleges the motion, which was filed on Wednesday.
Jonathan Johnson, President of Overstock.com, stated, “Recently discovered revelations of concerted action among certain market makers and these two brokerages necessitate that we amend our complaint to include additional claims. We expect that this conduct of Goldman Sachs and Merrill Lynch is fully actionable under anti-racketeering laws.”