Current Cases

In re Bed Bath & Beyond Corporation Securities Litigation

Status Current Case

Practice area Securities Litigation & Investor Protection

Court U.S. District Court for the District of Columbia

Case number 1:22-cv-02541-TNM


On July 27, 2023, the Honorable Trevor N. McFadden of the United States District Court for the District of Columbia largely denied Defts’ motion to dismiss in this securities class action against Ryan Cohen, RC Ventures LLC, and Bed Bath & Beyond, on behalf of investors who purchased or otherwise acquired Bed Bath & Beyond’s (OTCMKTS: BBYQ) common stock or options between August 12, 2022 and August 18, 2022 (the class period).

The Plaintiff claim that Ryan Cohen, an influential activist investor in Bed Bath seen as the leader of the “meme stock” movement, manipulated the market for Bed Bath securities in a “pump and dump” scheme by secretly orchestrating a massive sell off of his Bed Bath stock portfolio, based on insider information, while encouraging retail investors to buy the stock, driving the price up, only for it to crash by 40% days later after his sell off was revealed.  

Plaintiffs, who suffered significant losses during the class period. seek to recover damages caused by defendants’ violations of federal securities law under the Securities Exchange Act of 1934 and SEC Rule 10b-5.

Cohen Milstein is Liaison Counsel in this matter.

Case Background

Bed Bath & Beyond is a national home goods retailer. It also owns and operates a specialty retailer called buybuy BABY Inc. (“buybuy BABY”), which sells products meant for infants and children. Over the last few years, the Company has experienced a dramatic decline in sales and earnings, persistent losses, and a significant loss of market share to behemoths such as, Walmart, and Target. The company’s lost relevance and its poor financial performance has been accompanied by a lethal combination of sky-high debt and an endangered cash balance that has now left it days away from filing for bankruptcy.

In their January 30, 2023 complaint, Plaintiff alleges that Ryan Cohen, the former CEO of Chewy, Inc., current CEO and Chairman of the Board of Directors of GameStop Corp., and purported investor activist who held nearly 10% of Bed Bath’s outstanding shares, knowingly conducted insider trading of Bed Bath stock while manipulating the market of Bed Bath securities on various social media platforms in order to obtain the highest price of the stock to achieve his goal of surreptitiously selling off his entire Bed Bath stock portfolio.

In March 2022, after Cohen threatened to take control of Bed Bath’s Board of Directors, the company quickly entered into a cooperation agreement with him that required him to stand down in exchange for influence and access. Key terms of the cooperation agreement allowed Cohen to obtain three new seats on the board, and outsized influence over a new Board Strategy Committee charged with evaluation options for buybuy BABY’s future, which was considered the crown jewel of the company.

Given his control of these three Board seats, who were all also members of the Strategy Committee, his communications with the Board of Directors, which precipitated the June 2022 termination of the company’s previous Chief Executive Officer, and his communications with the Chief Financial Officer and other senior executives, Plaintiff claims that Cohen had extensive insider information into the financial health of Bed Bath and its future, including the inside knowledge that the Company had decided against Cohen’s plan to sell or spinoff buybuy BABY, the Company’s sole bright spot, to  resolve the company’s rapidly deteriorating financial problems.

Armed with this insider information, Plaintiff alleges that Cohen formed a plan to sell off all of his shares and options. Starting on August 12, 2022, Cohen began to manipulate the market for Bed Bath securities by publicly encouraging retail investors on social media platforms to buy shares while he planned to sell his. With misleading statements, filings, and a false Twitter post with a moon-emoji suggesting he believed the company’s stock price was going “to the moon,” he rallied hundreds of thousands of his social media followers to drive up Bed Bath’s stock price.

Plaintiff further alleges that Cohen purposefully and strategically filed two delayed SEC forms on August 16, 2022. First, Cohen filed a document known as a Schedule 13D that stated that he had not recently sold any Bed Bath stock. If Cohen had any concrete plans to sell his stock, he needed to disclose those plans on his Schedule 13D, but Cohen mentioned no such plans. Second, later that day, Cohen filed a Form 144 that outlined his potential plan to sell his stock. At that time, Cohen could submit his Form 144 by email, which the SEC publishes the following day or day after that. Cohen’s delay allowed him to surreptitiously liquidate his holdings over two days, on August 16 and 17.

On August 17, 2022, after the market closed, Cohen’s Form 144, intention to sell document, was released to investors.

But it was not until August 18, 2022 – after the market closed – that Cohen finally disclosed that he had sold his entire stake in Bed Bath. As a result, the company’s stock price plunged by 40% over the next three trading days.

Six weeks after Judge McFadden’s decision denying Cohen’s motion to dismiss, the Wall Street Journal reported that the SEC was investigating Cohen about his ownership and trades of Bed Bath & Beyond stock.

Case name: In re Bed Bath & Beyond Corporation Securities Litigation, Case No. 1:22-cv-02541-TNM, United States District Court for the District of Columbia