Radical ConsumeristTop Stories

Did Pump and Dump Allegations Lead to Suicide of Bed Bath & Beyond CFO? (VIDEO)

“It’s All Fun and Games Until Someone Gets Hurt”

It’s a phrase we’ve all heard countless times, usually when engaging in a dangerous pastime. What’s fun and innocuous now could quickly get out of hand, leading to unintended consequences, such as the recent tragic death of Bed Bath & Beyond’s CFO.

For the last year and a half, the meme stock phenomenon has been treated as little more than a joke by those not participating in or being affected by the mania. People laughed and cheered when a major hedge fund fell victim to the mechanizations of an online message board. These faceless and often nameless fund managers weren’t real people. Who cares if they lost everything? It’s all fun and games, and nobody was getting hurt.

Unfortunately, that’s not how it played out for Bed Bath & Beyond (NASDAQ: BBBY) and its former CFO, Gustavo Arnal. The struggling retailer got caught up in meme stock mania in recent months.

Despite seemingly being well on the way to bankruptcy, the company attracted the attention of meme investors thanks to the large proportion of short positions and the revelation that activist investor (and meme stock investor folk hero) Ryan Cohen owned 10% of the company.

The stock skyrocketed from $4.60 to $23.08 in a matter of weeks, only to plunge right back down after Cohen sold his entire holdings near the peak. On August 23rd, with the stock down 62% from its peak, a shareholder filed a lawsuit accusing Cohen and Arnal of participating in a “pump and dump scheme.

Source: CNBC Television YouTube

????Also Read: How Investors Can Make Money in a Bear Market With These 5 Inverse ETFs (VIDEO)

According to the lawsuit, which stated:

“With control over a significant portion of the public float, Cohen would essentially act as a price support for the stock while Gustavo would act in a similar capacity by controlling the sale of shares by Insiders. Under this arrangement, defendants would profit handsomely from the rise in price and could coordinate their selling of shares to optimize their returns. Cohen has historically employed pump and dump schemes to raise much-needed capital and has ignited several meme stocks to jaw-dropping heights.”

Eleven days after the lawsuit was filed, Arnal jumped 18 stories from his Manhattan apartment. While it’s currently unknown why he killed himself, the timing is sure to raise some eyebrows. We’ll have to wait and see if more details come out.

For its part, Bed Bath & Beyond denied all claims made in the lawsuit and believed they were “without merit.” Arnal’s death shouldn’t stop a trial from proceeding, as there are other defendants named in the lawsuit, including Cohen. Until a court hearing or a settlement outside of court, we’ll likely hear very little about the case.

Shares of Bed Bath & Beyond last traded at $7.86 per share, up +11.58% on the day. YTD, BBBY stock is down -48.19%.

Learn more about Bed Bath & Beyond: Website | Investor Deck | BBBY Chart

* Attention readers on mobile or tablet, if you cannot view the above chart in its entirety, please rotate your device sideways. Make sure you have your portrait orientation lock switched off.

Did you enjoy this article? If so, consider signing up for the Wealthy VC Email Newsletter below to start receiving our free weekly newsletter featuring the week’s best articles.

Follow Wealthy VC on Social Media: Facebook | Instagram | Twitter | LinkedIn | GETTR | Tumblr

????Join the Discussion in the Wealthy VC Investor Group

????Have a Stock Tip or New  Story Suggestion? Email us at Invest@WealthyVC.com

Disclaimer: Wealthy VC does not hold a position in any of the stocks mentioned in this article.

Shawn V.

Shawn is Marine veteran, originally from the San Francisco Bay Area. Shawn has a BS in Hospitality Management and an MBA, from the University of Nevada. In addition to writing for Wealthy VC, Shawn is also a writer for the financial website Seeking Alpha. Seeking Alpha | Email

Related Articles

Back to top button