Billionaire and Chewy co-founder Ryan Cohen is under investigation by federal regulators for his sudden sale of Bed Bath & Beyond during the height of the meme stock craze in 2022. wall street journal reported on Thursday, citing unnamed sources familiar with the matter.
Cohen bought a $121 million stake in Bed Bath & Beyond in the first quarter of 2022 through his investment firm RC Ventures, but just five months later, Bed Bath & Beyond soared amid a meme stock rally, giving him After the profits, Cohen suddenly sold his holdings for more than $60 million.
During his tenure, Cohen used his roughly 10% stake in the struggling retailer to drive change. He appointed three new board members and said he wants to modernize Bed Bath & Beyond’s supply chain and ensure it has a better product mix to attract customers, according to a letter sent to him by RC Ventures. Ideas for potential sale. Bed Bath & Beyond’s Board of Directors consists of wall street journal.
The Journal did not list the specific focus of the SEC investigation.Cohen did not immediately respond wealthRequest for comment.
Cohen attracted thousands of retail investors to Bed Bath & Beyond after buying its stock. The billionaire became one of the leaders of 2021’s meme stock craze after taking control of ailing video game retailer and social media hit GameStop, where he remains chairman. Retail traders on the Reddit Wall Street betting forum and other social media sites look for stocks that are highly shorted by investors in 2021 and 2022 and dub them meme stocks. Their goal is to trigger a short squeeze by buying into the company en masse, thereby driving up the stock price after forcing short sellers to exit their bearish bets. And it often works, albeit temporarily.
But at Bed Bath & Beyond, many retail investors suffered huge losses after Cohen sold his stake in the company. For example, in the days leading up to Cohen’s sale of his Bed Bath & Beyond stock in mid-August, retail investors bought a record $131 million worth of shares. Bloomberg The report cited data from Wanda Research Company. Then, Bed Bath & Beyond’s stock price fell 52% in just two days after Cohen revealed that he had sold his shares.
Bed Bath & Beyond was struggling until April 2023, when years of weak sales and significant losses forced management to file for Chapter 11 bankruptcy.
The company, which was worth more than $17 billion at its peak in 2017, was eventually sold to Overstock.com for just $21.5 million. On July 30, the company closed its remaining 360 stores as well as 120 Buy Buy Baby locations, which Cohen touted as growth opportunities for the company in 2022.
The billionaire is being sued by Bed Bath & Beyond investors who claim he made public statements before the sale, including a tweet containing: Smiling moon emoticon Mentioning a negative article about the company – tantamount to a pump and dump scheme that leaves retail traders in the dust.
During the July proceedings, District Judge Trevor McFadden in Washington, D.C., said meme stock investors may have “interpreted Cohen’s tweets to mean that Cohen was confident in Bed Bath and encouraged them to take action.”
Cohen has denied the claims, saying he only sold the shares because they appreciated more than he expected and were overvalued, but Judge McFadden declined to dismiss the case in July, saying the billionaire The rich man’s dealings are “rough”.
“Fraudsters may not escape liability just because they use emojis,” he added.