Grabar Law Office is investigating potential claims against the officers and directors of Bed Bath & Beyond, Inc. on behalf of current stockholders.

It is alleged that there was a scheme to manipulate the securities markets orchestrated by Cohen, the billionaire co-founder and former CEO of the pet e-commerce company Chewy, Inc. Cohen’s scheme was made possible through and with the willing participation of Bed Bath and JP Morgan, a U.S. broker-dealer based in New York, who provided Cohen with access to the U.S. securities markets to execute the scheme and otherwise assisted in carrying out the scheme.

Specifically, in March 2022, Cohen, through his investment firm Defendant RC Ventures, bought nearly a 10% stake in Bed Bath, which he successfully used to obtain three seats on Bed Bath’s board of directors and a commitment from the Company to study his proposal to turn around the company by, among other things, selling or spinning off Bed Bath’s more successful Buy Buy Baby chain. Over the next five months, however, Bed Bath’s stock price plummeted amid a stream of bad news, as the Company announced record losses, dwindling cash on hand, and soaring debt. By August, Bed Bath had also rejected Cohen’s turnaround strategy, electing to seek new loans backed, in part, by the Buy Buy Baby assets, along with the issuance of millions in new shares of stock that would dilute Cohen’s holdings. As a result, Cohen’s investment in Bed Bath securities was underwater by tens of millions of dollars with little prospect of improving anytime soon.

Other investors in Cohen’s position would have chosen between maintaining their investment or selling at a loss. But Cohen instead orchestrated a market manipulation scheme to artificially inflate the price and trading volume of Bed Bath securities so that he could secretly sell his holdings at a profit at the expense of Bed Bath’s public investors.

To carry out his scheme, Cohen needed to drive up the stock price and flood the market with trading activity so that he could sell his shares quickly, secretly, and at a profit. Cohen accomplished that goal by leveraging his loyal following among retail investors, many of whom closely followed his every public statement, filing, or social-media post to guide their own investment decisions. Since Cohen seized control of GameStop in 2021, many retail investors who traded in so-called “meme stocks”—like GameStop, AMC, and Bed Bath—viewed Cohen as their de facto leader, dissecting his public statements on social-media platforms such as Reddit, Discord, and Twitter. Delivering targeted messages that he knew would appeal to and resonate with these retail investors, Cohen deceived them into believing that he was holding onto his investment in Bed Bath and was projecting that the price of Bed Bath’s stock would soar to as much as $60 to $80 per share—a feat that Bed Bath had not achieved in years. In online discussion forums, these retail investors amplified Cohen’s misleading statements and further promoted the value of investing in Bed Bath, despite the near-universal agreement among analysts that the Company’s stock was worth less than $5 per share.

Cohen’s scheme resulted in the market for Bed Bath securities being flooded with retail investors who bought the Company’s stock at higher and higher prices, sending Bed Bath’s stock price to an intraday high of $30 on August 17, with the highest daily trading volume in more than a decade. While retail investors bought Bed Bath’s stock in record numbers, Cohen secretly sold his entire holdings of the Company’s securities, earning about $178.1 million in proceeds and $58 million in illicit profits from the scheme

More than a day after Cohen had dumped his remaining holdings, he finally disclosed his sales to the public in a filing with the SEC on August 18, after the markets had closed. Bed Bath’s stock price plunged on the news, dropping by 45% in after-hours trading. Later that day, Bed Bath announced that it had hired a restructuring expert as it pursued its new turnaround strategy. On August 31, Bed Bath formally announced its new strategic plan that involved shutting stores, taking on new debt, and issuing millions of new shares of stock. By mid-October, Bed Bath’s stock price had dropped to under $5 per share. As a result, retail investors who acquired Bed Bath securities based on Cohen’s manipulative and deceptive acts have suffered hundreds of millions of dollars in losses.

If you have held Bed Bath & Beyond shares since on or before March 1, 2022, you may be able seek corporate reforms, the return of funds expended defending litigation back to company coffers, and potentially a court approved incentive award if appropriate.

If you would like to learn more about this matter at no cost to you, contact us at jgrabar@grabarlaw.com or call 267-507-6085.