Ryan Cohen & Others (Bed Bath & Beyond Inc. stock)

According to the complaint, defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the company’s business, operations, and prospects. Specifically, defendants allegedly failed to disclose to investors that:

Excerpt

“Upon information and belief, at least on several occasions from March to August 2022, Cohen, Gustavo, and JPM discussed their plan of hyping the stock and exiting their positions of BBBY shares at some point. 27. On August 16, 2022, a Schedule 13D was filed to the SEC, on which Cohen stated that “[a]s of the date hereof, RC Ventures directly beneficially owned 9,450,100 Shares, including 1,670,100 Shares underlying certain call options, constituting approximately 11.8% of the Shares outstanding. Mr. Cohen, as the Manager of RC Ventures, may be deemed to beneficially own the 9,450,100 Shares directly beneficially owned by RC Ventures, constituting approximately 11.8% of the Shares outstanding.” (See Cohen’s Schedule 13D, attached hereto as Exhibit 1.) The filing also revealed Cohen had held on to his April call options that would only begin to pay out should the stock hit $60 a share before January 20, 2023.
[…]

The filing was signed by Cohen, whom knew that the information contained in the filing was false. Indeed, Cohen did not hold 9,450,100 Shares on August 16, 2022 when he submitted the Schedule 13D.

The Schedule 13D filing was materially false and constitutes a false written filing because (a) upon information and belief, Cohen sold most of the 9,450,100 Shares when the filing was submitted; (b) Cohen submitted Schedule 13D for the purpose of creating buying frenzy of BBBY stocks so that Cohen can finish selling his shares at artificially inflated price on the public; and (c) Cohen actually dumped most of his shares “as of the date hereof,” on August 16, 2022.

Investors, not knowing that Cohen’s filing was false and misleading, continued to buy millions of shares of BBBY stock. Spurred by Cohen’s filing, BBBY stock price has swung 75 percent from $15.36 to $28.6 later that day.

Also on August 16, 2022, with Schedule 13D in place, despite Cohen having almost liquidated all his BBBY positions, Cohen filed Form 144 on paper providing notice of his intent to sell up to all his shares and additional call options. This filing was not disclosed to the public until the market closed the next day, August 17, 2022, at 5:07 pm, when Cohen finished his dumping of BBBY shares. Right after the disclosure of the filing, BBBY shares tumbled after hours from record high $30 per share to around $22.5 per share.

On August 18, 2022, Defendants Cohen and Gustavo, respectively, filed Form 4 with the SEC reporting that they had sold all their BBBY shares on August 16, 2022. (See Cohen and Gustavo’s Form 144, attached hereto as Exhibits 2-3.) In reaction to this news, BBBY Stock dives to $16.16, or over 45%, on unusually heavy trading volume.

On August 19, 2022, BBBY stock plunged to a new low of $9.68, dropping another 52.6% from the previous day. 36. BBBY’s stock price continued to decline over the next two trading days, falling an additional 16.23%, to close at $9.24 per share on August 22, 2022, and falling another 4.98% to close at $8.78 on August 23, 2022, dropping over 70% from August 17’s highest price of $30 per share in five trading days after Defendants dumped their shares. Attached hereto as Exhibit 4 and the BBBY Price /Volume History chart (Source: New York Post, August 19, 2022) below. This reflects less than a $800 million market capitalization for the Company, after its Insiders profits at least 110 million dollars alone from their Insider sales from August 16 to August 17, 2022.”