“BANK OF AMERICA & GOLDMAN SACHS ACCUSED OF RACKETEERING” 
FROM THE -
JOURNALS of MonteFriesner ~ Saturday December 18, 2010 >
Financial Crime Consultant for WANTED SA >
WANTED SA has learned today that Overstock.com Inc plans to amend a lawsuit it filed in early 2007 to include racketeering claims against Goldman Sachs and Merrill Lynch, the online retailer said on Thursday.
The original lawsuit, filed in 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," alleged the motion, which was filed on Wednesday.
"The motion is the latest attempt by Overstock to shift the blame for its poor share price performance," a Goldman Sachs spokesman said. Bank of America declined to comment.
Overstock claims the brokerages' actions are illegal under New Jersey's Racketeer Influenced and Corrupt Organizations Act (RICO) and such claims can be decided by non-New Jersey courts.
Overstock also said in a filing that it had settled with some unnamed defendants for $4.44 million in the case.
The case is Overstock.com Inc v. Morgan Stanley & Co Inc et al, California Superior Court, San Francisco County, No. CGC-07-460147. The docket lists Stein & Lubin in San Francisco as counsel for Overstock.com and the other plaintiffs. Bingham McCutchen; O'Melveny & Myers; Kirkland & Ellis; Proskauer Rose; Wilmer Cutler Pickering Hale and Dorr; Sullivan & Cromwell; Clifford Chance; Fenwick & West; Morgan, Lewis & Bockius; Skadden, Arps, Slate, Meagher & Flom; Davis Polk & Wardwell; and Paul, Weiss, Rifkind, Wharton & Garrison are listed as counsel for defendants Bank of America and Goldman Sachs.
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