Copper River Partners (formerly Rocker Partners), the short-selling hedge-fund of David Rocker and Marc Cohodes, and associated entities have settled a case brought against them in 2005 by Patrick Byrne, CEO of embattled internet retailer Overstock, according to  The Register.

Note: The suit doesn´t charge naked shorting, but defamation and illegal collusion with research analysts.

Copper River worked with a research firm, Gradient Analytics, that  employed well-known financial journalist Herb Greenberg, one of the central figures in the story of the “capture” (corruption) of Wall Street journalists by speculators. Hedge funds stand accused of engaging in illegal collusion with journalists to drive down stock-prices of companies.

Last year, Gradient settled for a figure between $1.5-$2 million and issued an apology. Now comes this further vindication.

Despite the relatively trivial amount won in the Rocker case, $5 million, it´s noteworthy that the settlement does all the things victory in an actual court trial does, without the risk of losing on a technicality.

It also underscores something I´ve been suggesting for a while.

That public interest blogging and journalism alone isn´t enough.

It´s necessary to actually sue or inflict damage of some kind to score victories in these things.

Unfortunately, that´s usually not worth doing for people who aren´t wealthy.  Vicariously, however, we “little people” can at least relish the spectacle of the behemoths of finance getting it in the rump.

And this case  could prove to be a model for similar lawsuits by other embattled companies.

Still to come is Overstock´s suit against 12 prime broker-dealers (including Goldman Sachs), which will go to trial in late 2010. The suit charges an illegal stock market manipulation scheme.

Also in the works, the SEC, which dropped its investigation of Gradient in 2007, has now turned its sights on Byrne. Given Byrne´s  charge of regulatory and media capture, there are some who see this as retaliatory.