Gradient Analytic /Camelback Research is a so-called independent analyst, who provides financial research on companies for client investors. They evaluate companies and make recommendations regarding the stock. Frequently, Gradient would be quoted in the short friendly media and was actively critical of certain companies who were under attack by the shorts, including Overstock and Krispy Kreme. Gradient's so-called “independent anaylsis” was so factually distorted and openly adversarial that victim companies wondered if Gradient was a mouthpiece for the shorts.

That question was answered when two former employees of Gradient came forward with the truth. In sworn testimony before Congress, they explained how Gradient, for a fee, would write a negative report on a company under attack by the shorts. According to their testimony, David Rocker, manager of several large short hedge funds, would ghost-write or edit allegedly independent reports that maliciously attacked companies he was short in. He would dictate the timing of the release of the report to coordinate with other prongs of the attack, and was instrumental in getting the Gradient report excerpts published in media outlets whose reporters formerly worked for Rocker and Jim Cramer at

The San Francisco office of the SEC, which apparently relied on Rocker/Gradient information in their investigations of victim companies, was embarrassed enough in early 2006 to issue subpoenas for Gradient's records that involved David Rocker, Jim Cramer, the media and the shorts. The resulting furor was quickly extinguished when Christopher Cox, Chairman of the SEC, withdrew all subpoenas, pending an internal review of the SEC's policy regarding the First Amendment right to free speech. Jim Cramer ripped up his subpoena with theatrical disdain on his afternoon television show. Several months later, Christopher Cox gave Gradient a complete bye, reasoning that Gradient was protected by the First Amendment. This decision by Cox left most securities lawyers scratching their heads: Criminal activity is not protected by the First Amendment and there was sworn Congressional testimony about potential criminal activity.