Judge rules Cohen must defend insider trading claims over 2022 stake in bankrupt retailer
Ryan Cohen, the billionaire CEO of GameStop and prominent figure in the meme stock movement, is facing a lawsuit from the remnants of Bed Bath & Beyond, seeking to reclaim $47.2 million in alleged insider profits. A U.S. District Judge in Manhattan, Naomi Reice Buchwald, ruled on Friday that Cohen and his firm, RC Ventures, must answer to claims that they earned short-swing profits by buying and selling more than 10% of Bed Bath’s stock within a six-month window.
Cohen purchased the stake in March 2022 and exited abruptly just five months later in August, netting an estimated $60 million. Under U.S. securities law, insiders holding more than 10% of a company’s stock are required to return any profits from trades made within six months.
Cohen argued that he was unaware his holdings surpassed 10%, claiming Bed Bath’s undisclosed stock buybacks skewed his calculations. However, Judge Buchwald rejected that defense, noting the company had publicly disclosed its repurchase program and asserting it “strains credulity” that Cohen wouldn’t have reviewed such investor disclosures before investing heavily.
The judge dismissed a separate claim that Cohen acted as a de facto director due to his influence in securing three board seats, concluding it didn’t meet legal thresholds for liability.
GameStop is not a defendant in the case, and neither Cohen’s legal team nor representatives for GameStop and the plaintiffs have responded to comment requests. Bed Bath & Beyond filed for bankruptcy in April 2023, and its name and trademarks were later acquired by Overstock.com, now rebranded as Beyond.
The case is being heard in the U.S. District Court for the Southern District of New York under docket number 24-05874.
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