Zinger Key Points
- Cohen's a short tryst with Bed Bath & Beyond shares in 2022 proved healthy for the shares of the struggling home furnishing retailer.
- His abrupt sales after a little over 5 months did more damage to the stock, and unsuspecting investors were deep in the red by then.
Canadian businessman Ryan Cohen is reportedly under the Securities Exchange Commission's scanner over his trades in the stock of home furnishing retailer Bed Bath & Beyond, Inc. BBBYQ, which went on to file for bankruptcy protection in April.
What Happened: The SEC is investigating activist investor Cohen’s ownership of Bed Bath & Beyond's stock, which in its heydays ran up amid the meme stock frenzy, and also his abrupt sales of it, said Wall Street Journal in a report, citing people familiar with the matter.
Cohen, the co-founder of Chewy Inc. CHWY and who currently serves as the executive chairman of GameStop Corp. GME, in a March 2022 letter to Bed Bath & Beyond's board disclosed that his investment firm RC Ventures took a 9.8% stake in the struggling retailer.
The activist investor called for management to divest the Buy Buy Baby business and narrow its focus, among other things. Subsequently, it was reported that he owned stocks and options representing 9.4 million Bed Bath & Beyond shares, representing an 11.8% stake in the retailer, valued at $120 million.
Cohen also succeeded in inducting three members to the board of the company.
In an equally surprising move, Cohen sold off the entire stake in August 2022, which netted him a profit of $60 million. The stock collapsed in reaction to the news. The disposal came just a few days after he tweeted an emoji, which signaled his bullish stance on the company and sent its shares higher by 12%.
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Why It's Important: The SEC has now requested information from Cohen about his trades and his communications with the management of Bed Bath & Beyond, the Journal said, citing people familiar with the matter. The regulator has also reportedly sought records from some of the retailer's current and former board members.
In 2022, investors in Bed Bath & Beyond filed a lawsuit against Cohen in Washington, alleging the latter committed fraud by using insider information to sell shares. His statements on Twitter and SEC filings were part of a “pump-and-dump” scheme that left investors with huge losses, they alleged.
Refusing to dismiss the case, U.S. District Judge Trevor N. McFadden said in an order issued in July that the timing of Cohen's trades was “sketchy.”
Bed Bath & Beyond relaunched in August following the acquisition of its intellectual property assets by Overstock.com in June.
Photo: Courtesy of Bill Jerome on Flickr
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