Good news for activist investor Ryan Cohen! A federal judge recently dismissed a lawsuit filed by Bed Bath & Beyond shareholders accusing Cohen of unfair tradin

Cohen Victorious: Bed Bath & Beyond Lawsuit Dismissed


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Image credit: Tingey Injury Law Firm

Good news for activist investor Ryan Cohen! A federal judge recently dismissed a lawsuit filed by Bed Bath & Beyond shareholders accusing Cohen of unfair trading practices.

The Allegations:

  • Shareholders claimed Cohen misled investors with a social media post using a "moon" emoji, implying a positive outlook for the company's stock price.
  • They further alleged Cohen engaged in securities fraud by selling a large chunk of his Bed Bath & Beyond holdings shortly after the price surged, profiting significantly.

The Court's Decision:

  • The judge dismissed the "moon" emoji argument, stating it wasn't a concrete enough statement to constitute actionable fraud.
  • However, the judge initially acknowledged the potential validity of the short-swing profits claim.

The Twist:

  • The lawsuit was ultimately thrown out due to Bed Bath & Beyond filing for Chapter 11 bankruptcy.
  • Since the company's shares were "canceled" as part of the bankruptcy plan, shareholders no longer have a standing to sue.

What This Means:

  • Cohen avoids a potentially costly legal battle.
  • The case against him remains undecided on the merits of the short-swing profits claim.
  • Investors who lost money due to Bed Bath & Beyond's bankruptcy are unlikely to see any compensation through this lawsuit.

Looking Ahead:

  • The bankruptcy proceedings for Bed Bath & Beyond will continue to unfold.
  • The impact of the bankruptcy on various stakeholders, including former shareholders and employees, will be determined by the courts.

While Cohen wins this legal round, the saga surrounding Bed Bath & Beyond's financial troubles continues.

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