Ryan Cohen, a meme-stock investor, is being investigated by the SEC over his 2022 trading activity in Bed Bath & Beyond’s stock. A billionaire, Cohen initially invested $120 million in BBBY stock early in the year but unexpectedly sold it just five months later. He explained that he liquidated the position because the stock’s value had unexpectedly exceeded his perceived worth.
Cohen’s involvement in the company triggered a trading frenzy, resulting in a 34% single-day surge in its stock price. However, when he revealed his sales, the stock plummeted. Before this, he had successfully nominated three new board members. People familiar with the matter report that the SEC has asked Cohen for details regarding his trades and communications with Bed Bath & Beyond’s officers and directors. Additionally, the regulator has sought records from both current and former board members of the company.
Cohen, who also serves as the chairman of video game retailer and fellow meme stock GameStop, netted nearly $60 million in profit from the sale.
Just a week before he sold his shares, Cohen responded to a CNBC article about Bed Bath & Beyond by tweeting a picture of a woman pushing a full shopping cart in the store, along with the caption, “At least her cart is filled,” and a smiling moon emoji. Moon emojis are linked with the expression “to the moon,” which investors employ to signify their belief that a stock will experience significant upward movement. Meme stock enthusiasts could have interpreted Cohen’s tweet as a sign of his confidence in Bed Bath & Beyond and an encouragement for them to take action.
SEC civil investigations occasionally extend beyond two years and may conclude without the regulator filing formal allegations of misconduct.
Cohen’s capacity to gather a following of retail investors surged during the height of the Covid-19 pandemic, as traders, influenced by social media posts and online communities like Reddit, began speculating on meme stocks.
Cohen established the online pet retailer Chewy and subsequently cultivated a devoted group of individual investors who follow his stock choices. In 2021, he gained prominence for his involvement with video game retailer GameStop, where he currently holds the position of executive chairman.
(Source: Joseph Wilkins | Market Insider | Dave Michaels | Lauren Thomas | WSJ)
