Meme stock king Ryan Cohen’s ownership and sale of Bed Bath & Beyond stock that sparked frenzy is being probed by SEC a year after company CFO Gustavo Arnal plunged to his death

The U.S. Securities and Exchange Commission (SEC) has opened an investigation into billionaire Ryan Cohen’s ownership and sudden sell-off of Bed Bath & Beyond shares last year.

Cohen, the so-called “king of meme stocks,” took a $120 million stake in the company, pushing for changes and promoting them on social media, helping spark a frenzy that saw the title climb 34% in one day.

But just days after publishing positive articles about the company, Cohen sold his shares in August 2022, triggering its collapse. The investor, currently chairman of GameStop, made nearly $60 million from the transaction over five months.

A few months later, Bed Bath & Beyond filed for Chapter 11 bankruptcy – and its CFO Gustavo Arnal, 52, committed suicide after jumping from the Jenga Tower in New York following a lawsuit filed by shareholders against him, the company and Cohen, alleging a pump-and-dump strategy

The SEC now wants information from Cohen about his dealings and communications with officers or directors of the home goods retailer, the the wall street journal reported Thursday.

The company’s shares stagnated after Cohen sold his shares last August

U.S. District Judge Trevor N. McFadden called Cohen’s timing of transactions “sketchy” in an order issued in July.

The regulator also requested the records of some current and former members of the company’s board of directors, according to the media outlet.

Cohen, who is currently chairman of GameStop, had disclosed a nearly 10% stake in Bed Bath & Beyond in March 2022 and wanted the company to explore strategic alternatives including a complete sale.

The same month, Bed Bath & Beyond and Cohen reached an agreement to add three new directors to the company’s board and the retailer agreed to seek alternatives for its buybuy Baby unit.

However, in August, a regulatory filing showed that Cohen exited his position in the company following a stunning rebound during the month.

Bed Bath & Beyond and the SEC did not immediately respond to requests for comment. Cohen could not immediately be reached for comment.

SEC investigations can take years and do not always end with allegations of wrongdoing.

Cohen’s investment in the company was significant because of his popularity among small retail investors, motivated by his role in the GameStop frenzy.

Between 2020 and 2021, he encouraged traders on Reddit and other social media sites to buy shares of the video game retailer, a company established by investors who had written off.

Arnal jumped from the 18th floor of a 57-story building in Manhattan’s Tribeca neighborhood.

Gustavo Arnal, 52, was sued a week before his death for allegedly inflating the price of Bed Bath & Beyond stock as part of a “get rich quick” scheme.

The stock rose from $5 to over $480, giving rise to what is now known as the “meme stock.”

Arnal jumped from the 18th floor of a 57-story building in Manhattan’s Tribeca neighborhood.

Their strategy involves using a “short squeeze,” in which those betting against a stock are forced to buy shares to close their position.

In September 2022, shareholders filed a lawsuit, claiming that Cohen knew of negative news regarding the company when he sold his shares and failed to disclose the information.

Cohen and 21-year-old maths student Jake Freeman cashed in within 24 hours of each other in August last year – before the company’s share price plunged at the end of the week.

Although it was Cohen’s interest in BBBY that coincided with a rise in the company’s value, it was Freeman who pulled out first and took the lion’s share of the $180 million dollars back.

Freeman, who was studying at the University of Southern California, purchased $25 million worth of BBBY stock through his Wyoming-based holding company Freeman Capital.

He raised money through friends and family, but also showed extraordinary ambition and intelligence from a young age.

Student Jake Freeman, who ‘loves baths’, made $110 million after buying $25 million worth of stocks

Freeman first expressed concerns about the company’s future in a letter to its executives in July, in which he warned of an “existential crisis.” He suggested the company could remedy its financial woes by offering stock warrants and convertible bonds to bondholders, in exchange for a reduction in the company’s debts.

But a month later — on a day when the stock soared above $27 a share (he had bought it at $5.50) before closing at $20.65, up 31 percent — ​​he sold his stake.

His assets were worth more than $130 million at the time.

A day later, Cohen signaled his intention to sell his 10 percent stake acquired through his venture capital firm RC Ventures. By the end of the following day, BBBY was down 20 percent.

Arnal’s suicide came days after the struggling retailer announced it was closing stores and laying off employees.

His wife of 28 years, Alexandra Cadenas-Arnal, was in the apartment when he suddenly jumped to his death, according to reports.

It also followed news that Arnal had been included in the shareholders’ lawsuit over accusations of artificially inflating the company’s stock price in a “pump and dump” scheme.

The big-box chain – once considered a so-called “category killer” in home and bath items – saw its fortunes falter after trying to sell more of its own-brand products.

In June, the bankrupt retailer was bought at auction for $21.5 million – in a deal that will see all of its stores close and the brand continue in name only.