Billionaire Ryan Cohen Investigated by SEC for Bed Bath & Beyond Trades
Billionaire and Chewy co-founder Ryan Cohen is being investigated by federal regulators for his sudden sale of Bed Bath & Beyond during the height of 2022’s meme stock craze, The Wall Street Journal reported Thursday, citing unnamed sources familiar with the matter.
Background
- Ryan Cohen bought a $121 million stake in Bed Bath & Beyond in the first quarter of 2022 through his investment firm RC Ventures.
- He then sold his holdings just five months later after Bed Bath & Beyond soared in a meme stock rally, making a profit of over $60 million.
Cohen’s Involvement with Bed Bath & Beyond
Cohen used his roughly 10% stake in the ailing retailer to push for changes during the brief period he was involved with the company. He was able to get three new board members appointed and proposed modernizing the supply chain and improving the product mix to attract customers. He also floated the idea of a potential sale.
SEC Investigation
The Securities and Exchange Commission is investigating Ryan Cohen’s trades, but the specific focus of the investigation has not been disclosed.
Impact on Retail Investors
Cohen’s involvement in Bed Bath & Beyond attracted thousands of retail investors. However, many of these investors suffered significant losses after Cohen sold his stake in the company. Retail investors bought a record $131 million worth of the stock in mid-August 2022, but after Cohen revealed he had sold his stake, Bed Bath & Beyond stock tanked 52% in just two days.
Bankruptcy and Sale of Bed Bath & Beyond
Bed Bath & Beyond continued to struggle and eventually filed for Chapter 11 bankruptcy in April 2023. The company was eventually sold to Overstock.com for $21.5 million. On July 30, the company closed all its remaining stores.
Lawsuit and Denial of Claims
Bed Bath & Beyond investors sued Ryan Cohen, claiming that his public statements prior to his sales amounted to a pump-and-dump scheme. Cohen denied the claims, stating that he sold the shares because they became overvalued. The lawsuit is ongoing, with the judge refusing to dismiss the case and calling Cohen’s trades “sketchy.”
