“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,” Byrne wrote in a more than 1,600-word statement. He founded the company in 1999 and took it public three years later.
In a controversial career that included knock-down battles with short sellers and a foray into cryptocurrency, it was Byrne’s personal claims about a romance with a Russian agent and his involvement in federal election investigations that ended his tenure at Overstock. Before rallying today, shares were down 22% since the company published his statement on Aug. 12.
Passages in that release confused Wall Street and left some wondering about Byrne’s stability. “Starting in 2015 I (operating under the belief that I was helping legitimate law enforcement efforts) assisted in what are now known as the ‘Clinton Investigation’ and the ‘Russian Investigation,”’ it read. “It was the third time in my life I helped the Men in Black.”
That statement quoted Byrne as saying the probes were “less about law enforcement and more about political espionage.” He elaborated in a subsequent New York Times interview, saying he came public this month because of concern about the U.S. government’s prosecution of Maria Butina, with whom he claimed a romantic relationship. Butina is serving an 18-month prison sentence for failing to register as a Russian agent.
Butina is a self-styled Russian gun-rights activist who befriended senior officials from the National Rifle Association and the Republican party in the run-up to the 2016 election. Aspects of Byrne’s story remain fuzzy, but some of it can be fashioned from the Times’s account of its interview with him, Overstock’s statements and articles published on the website of a Fox News contributor named Sara Carter which Byrne “confirmed.”
In those, Byrne is depicted as getting involved with Butina after they met in 2015, growing suspicious of her as she pressed for information on Donald Trump and Hilary Clinton, notifying the FBI of their interactions, then coming to regret the handling of her prosecution.
The resignation reassures investors
“This is a tremendous catalyst for the stock,” said D.A. Davidson’s Tom Forte, one of only two analysts on Wall Street covering Overstock. “I think the latest controversy was one too many.”
Byrne was well known for unusual behavior. He sued brokerages over claims tied to naked short-selling in 2007 and has said the banks settled the case for tens of millions of dollars. He’s compared an Overstock executive to a Star Trek character in announcing her promotion. He likened Overstock’s cryptocurrency ambitions to Jonas Salk’s polio vaccine and joked on a conference call in recent weeks about loaning office space to the SEC amid an investigation into the company’s tZero push.
Overstock has been considering selling its online retail business and Byrne’s departure will probably accelerate that process, according to Forte, who is bullish on Overstock.
“I think his legacy will be the shareholder value created on the blockchain investments,” he said. “He saw the writing on the wall early on.”