Rogue investor Ryan Cohen’s quick in-and-out of his ownership position of the late, lamented Bed Bath & Beyond last year is being investigated by the Securities and Exchange Commission, according to a new report by the Wall Street Journal.
Cohen, infamous for his meme-driven stock maneuvers that mostly involved GameStop – a company he now heads – bought a 11.8% position in BBB but five months later suddenly sold it, netting about $60 million according to published reports. The retailer’s stock had soared on the announcement of his buy-in and just as quickly tanked once the sale was announced.
The Journal is reporting that “The SEC has requested information from Cohen about his trades and his communications with officers or directors at Bed Bath & Beyond, according to people familiar with the matter. The regulator has also sought records from some of the company’s current and former board members.”
Cohen did not comment to the publication about the investigation nor did the SEC provide any comment. A group of investors sued Cohen last year, alleging fraudulent activity in his BBB stock trading that, the WSJ said, “were part of a pump-and-dump strategy that left small investors nursing big losses.” That suit is still pending in a Washington, DC federal court. The judge in the case, in declining to dismiss it, called the timing of Cohen’s trading activity “sketchy.”
Cohen, in initially responding to the suit, claimed he had always indicated he could sell his shares at any time and he had done nothing wrong. In his filing, the WSJ reported he said the value of the BBB stock had “unexpectedly increased to a value that exceeded what he believed it was worth.”
Of course, Bed Bath filed bankruptcy earlier this year and was subsequently liquidated, its stores all closed while its brand and other intellectual properties sold off to others, including Overstock.com which is now operating under the Bedbathandbeyond.com name.
The Journal makes it clear that not all investigations lead to legal actions: “The SEC’s civil investigations sometimes take more than two years and can end without the regulator bringing formal claims of wrongdoing.” So anything happening – if it does – is unlikely for some time.
But as one more piece of drama in the sad saga of Bed Bath & Beyond, it seems to be a fitting coda. The company may be gone but the aftershocks keep coming.
WarrensReport 