UPDATE 1-Overstock says it settles with hedge fund

Tue Dec 8, 2009 6:18pm EST

* Rocker accused of campaigning to pressure share price

* Overstock CEO an outspoken critic of short-sellers

NEW YORK Dec 8 (Reuters) - A hedge fund is paying $5 million to settle a long-running lawsuit filed by online retailer Overstock.com (OSTK.O), the Salt Lake City-based company said Tuesday.

The settlement comes some four years after Overstock sued the hedge fund, once known as Rocker Partners, claiming it waged a campaign to drive down the company's share price. The lawsuit was championed by Overstock CEO Patrick Byrne, who has been an outspoken and controversial critic of short sellers, or traders who bet on a stock's decline.

Overstock said in a news release the hedge fund will pay it $5 million to settle the matter. Rocker Partners was then known as Copper River Partners. Copper River closed last December.

The company said it could not provide a copy of the settlement from the lawsuit, which was filed in California state court. An attorney for the hedge fund was not immediately available for comment.