November 03, 2022

Plaintiff’s lawyer says going after Gustavo Arnal’s estate in meme-stock case would have been ‘messy and just not economical’

Bed Bath and Beyond Inc.’s late finance chief Gustavo Arnal, who died by suicide in September, has been dropped from a shareholder lawsuit that had accused him of colluding with activist investor Ryan Cohen to artificially inflate the struggling home-goods retailer’s share price.

Going after Mr. Arnal’s estate “would have been complicated, messy and just not economical,” said Steven Toll, a managing partner at law firm Cohen Milstein Sellers & Toll PLLC and counsel for Pengcheng Si, who filed the suit. “There’s plenty of grief in his family, and us making it even worse didn’t seem worth it,” Mr. Toll said.

In an amended 100-page complaint filed Tuesday, Mr. Arnal is no longer listed as a defendant. Gone are claims from the original 24-page complaint that Mr. Arnal and Mr. Cohen colluded to boost the company’s share price. The original filing didn’t provide evidence for such conversations between the two men. Bed Bath & Beyond has said the lawsuit was without merit.

Mr. Arnal, 52, died by suicide in early September amid a mounting financial crisis at the retailer and shortly after he was accused in the original complaint of having sold Bed Bath & Beyond shares while in possession of material insider information. He sold about $1.4 million worth of stock in mid-August under a prearranged trading plan, filings show.

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The amended complaint adds details based on publicly available information, for example Mr. Cohen’s takeover of videogame retailer GameStop Corp. The discovery process however, which is the early-stage part of litigation when both sides gather evidence through depositions, hasn’t started yet, Mr. Toll said, adding that nothing has been learned about collusion alleged in the original complaint between Mr. Cohen and Mr. Arnal.

Mr. Toll said he hadn’t heard from Bed Bath & Beyond or Mr. Arnal’s estate leading up to the filing of the amended complaint. This was expected given that the defendants haven’t yet been served with the lawsuit, which is among the next steps in the case, Mr. Toll said.

Read the article on The Wall Street Journal. (Subscription required.)