Bed Bath & Beyond’s bankruptcy has precluded shareholder claims against activist investor Ryan Cohen, U.S. District Judge Dale Ho ruled on Tuesday.
Shareholders Todd Augenbaum and Judith Cohen had claimed that Cohen and his firm RC Ventures were required by securities laws to give up a financial boon from buying and selling stock within a six-month period, known as “short-swing” profits.
They alleged that Cohen and RC Ventures “earned windfall short-swing profits ‘while other investors in the Company’s common stock . . . suffered a dramatic loss,’” as noted in Ho’s opinion, filed in the U.S. District Court in the Southern District of New York.
Ho ruled that, while the Bed Bath & Beyond shareholders had standing to file their suit, the retailer’s bankruptcy and exit plan last year, which “canceled, released, and extinguished” all its shares, have rendered it moot.
Ryan Cohen first disclosed a 9.8% stake in Bed Bath & Beyond in early 2022, at which point he also criticized the retailer’s “scattershot” turnaround strategy and began pushing various moves, including a sale of its BuyBuy Baby banner or the entire business. Later that year, with his stake up to nearly 12% and the stock price popping, Cohen announced plans to unload his shares.
This followed a similar meme stock pattern seen at GameStock after Ryan Cohen and RC Ventures amassed a stake and became involved with that retailer’s operations.
