The executive vice president and CFO of Bed Bath & Beyond (BBBY), who took his own life by jumping from a Tribeca skyscraper on Sept. 2, had been facing a $1.2 billion stock suit since late August over allegedly inflating the company’s share value.
A group of shareholders claiming a loss of around $1.2 billion sued the company’s CFO Gustavo Arnal and majority shareholder Ryan Cohen, who is also a billionaire investor and GameStop chairman, for accusations of artificially inflating the firm’s stock price in a “pump and dump” scheme.
The class-action suit, filed in the U.S. District Court for the District of Columbia on Aug. 23—11 days prior to Arnal’s death—was first reported by the Daily Mail. It claims that Cohen had approached Arnal about his plan to control shares of Bed Bath & Beyond and from which they could both profit—before Arnal sold off his shares at a higher price after the scheme.
The filing alleged Cohen offered to purchase a large stake in the company, including call options on more than 1.6 million BBBY shares with a strike price between $60 and $80, while in exchange Arnal would ensure that insiders would not flood the market with the stock.
As part of the plan, Arnal “agreed to regulate all insider sales by BBBY’s officers and directors to ensure that the market would not be inundated with a large number of BBBY shares at a given time,” the lawsuit reads. It also said Arnal issued “materially misleading” statements to investors regarding the company’s strategic plans, financial condition, etc.
The two were listed as defendants, while one plaintiff, Pengcheng Si of Falls Church, Virginia, said she and her spouse bought 8,020 shares of the company between March 25 and Aug. 18 “and have suffered realized and market losses of approximately $106,480.”
Shares in the company have been highly volatile in recent months, being viewed as a so-called “meme” stock, which trade more on social media sentiment than economic fundamentals.
This year, BBBY stock climbed from $4.4o per share in early July up to $30 per share on Aug. 17, just before Arnal sold more than 42,500 shares of company stock, on Aug. 16, for more than $1 million, according to MarketBeat.com. Following the completion of the transaction, Arnal still held nearly 267,900 shares in the company worth more than $6 million.
The company’s stock traded at about $8.63 per share by the close of the market on Sept. 2.
The court papers also claims that Arnal and Cohen discussed an exit strategy with J.P. Morgan Securities LLC before they sold off their shares. Although BBBY is said to have been in the early stages of evaluating the complaint, it believes “the claims are without merit,” Reuters reported.
The Epoch Times has reached out to the company for comment.
Arnal, 52, fell to death from his 18th-floor apartment in “Jenga Tower” in Manhattan’s Tribeca neighborhood, the New York City Police Department confirmed to news outlets.
BBYC confirmed Arnal’s death in a Sept. 4 statement, adding that the entire company “is profoundly saddened by this shocking loss.”
“Our focus is on supporting his family and his team, and our thoughts are with them during this sad and difficult time. Please join us in respecting the family’s privacy,” said Harriet Edelman, the chair of Bath & Beyond Inc. Board of Directors.
Last week, the home-supply retail giant said to close 150 stores, cut jobs, and overhauled its merchandising strategy in an attempt to turn around its money-losing business.
It forecast a bigger-than-expected 26 percent slump in same-store sales for the second quarter, and said it would retain its buy buy Baby business, which it had put up for sale.
If you or someone you know is experiencing a crisis or is considering suicide, has mental health issues, or engaging in substance abuse, dial or text the U.S. Suicide and Crisis Lifeline at 988 to speak with a counselor. If you’re in the United Kingdom, call the Samaritans at 116123.
Reuters contributed to this report.
From The Epoch Times