We are investigating whether Ryan Cohen (“Cohen”) and RC Ventures LLC (“RCV”) violated federal securities laws in connection with their recent sales of common shares and call options of Bed Bath & Beyond Inc. (ticker: BBBY) (“BBBY”).
If you were or remain a BBBY shareholder and have questions about your legal rights, you may contact our firm using the form below to discuss your options at no charge.
Why is there an investigation?
On March 6, 2022, Cohen wrote a letter to the BBBY board of directors (“Board”) in his capacity as manager of RCV, disclosing that RCV beneficially owned approximately 9.8% of BBBY’s outstanding shares. Among other things, the letter (i) expressed concerns about the compensation of BBBY’s leadership relative to performance and its strategy for reigniting meaningful growth, and (ii) recommended operational changes and the exploration of strategic alternatives, including spinning off buybuyBaby, Inc. and a full sale of the Company. Cohen concluded the letter by stating, “I am not in a position to join Bed Bath’s Board and personally drive the initiatives outlined in this letter. This does not mean, however, that RC Ventures will not seek to hold the Board and management accountable if necessary.”
On March 7, 2022, Cohen and RCV filed a Schedule 13-D with the SEC, disclosing that RCV had acquired 7,780,000 BBBY shares directly for approximately $119,376,296, and call options exercisable into 1,670,100 BBBY shares for approximately $1,785,263. The call options expired in January 2023, had strike prices ranging from $60-80 per share, and were acquired on February 28, 2022, and March 1, 2022. BBBY stock closed at $16.89 per share on February 28, 2022, and at $16.67 on March 1, 2022, and thus RCV’s call options were deeply “out-of-the-money.” The SEC filing further stated that Cohen and RCV “intend to engage in communications” with the BBBY Board and management “regarding opportunities to enhance shareholder value and improve corporate governance.”
On March 25, 2022, BBBY announced a cooperation agreement with RCV and Cohen that, among other things, appointed Marjorie L. Bowen, Shelly C. Lombard and Benjamin Rosenzweig to the BBBY Board. Further, Ms. Bowen and Mr. Rosenzweig were appointed to a four-member Strategy Committee of the Board focused on supporting the Board’s oversight and review of a strategic analysis of the buybuy BABY business.
On June 29, 2022, BBBY announced that Mark Tritton had ceased serving as President and Chief Executive Officer of BBBY and as a member of the Board, effective June 23, 2022, and that effective June 23, 2022, Sue Gove, a member of the Board, was appointed Interim Chief Executive Officer.
By July 28, 2022, the price of BBBY’s stock had fallen to $4.84 per share. However, on growing volume, the price of BBBY’s stock thereafter jumped from a close of $5.03 per share on July 29, 2022, to a close of $16.00 per share on August 15, 2022.
On August 15, 2022, after the markets closed, Cohen and RCV filed a Form 3 with the SEC disclosing beneficial ownership of more than 10% of BBBY’s shares.
On August 16, 2022, before the markets opened, Cohen and RCV filed an amended Schedule 13D with the SEC, disclosing 11.8% ownership of BBBY’s shares. That day, BBBY stock closed up 29.06%, at $20.65 per share, on volume of over 395 million shares, and on August 17, 2022, BBBY closed up another 11.7%, at $23.08 per share, on volume of over 261 million shares.
On August 17, 2022, after the markets closed, the media reported that, per a Form 144 filing dated August 16, 2022, Cohen and RCV had filed notice of the proposed sale of all of their shares and call options in BBBY. BBBY shares promptly dropped more than 10% from their peak prior to the disclosure.
On August 18, 2022, before the markets opened, BBBY filed a Form 8-K with the SEC stating in relevant part, “[w]e were pleased to have reached a constructive agreement with RC Ventures in March and are committed to maximizing value for all shareholders . . . we have been working expeditiously over the past several weeks with external financial advisors and lenders on strengthening our balance sheet. . .”
On August 18, 2022, BBBY shares dropped 19.63%, to close at $18.55 per share on volume of over 239 million shares.
On August 18, 2022, after the markets closed, Cohen and RCV filed a new Schedule 13D and Form 4 with the SEC, disclosing the sale of all of their BBBY shares and options on August 16 and 17, 2022, thus reducing their stake in BBBY to zero. The shares were sold at an average price of approximately $22.88 per share. Based on SEC filings, media sources estimated that Cohen and RCV earned a $68 million profit on their BBBY stock and call purchases for a 56% return.
Also on August 18, 2022, after the markets closed, Bloomberg reported that BBBY had retained the law firm of Kirkland & Ellis—which has a large and prominent bankruptcy and restructuring practice—to advise on raising new money and/or refinancing debt.
On August 19, 2022, after the markets closed, Bloomberg further reported that (i) suppliers to BBBY were restricting or halting shipments after BBBY fell behind on payments, and (iii) several of the firms that provide credit insurance or short-term financing to BBBY vendors had revoked coverage of BBBY.
Between August 19, 2022 and August 23, 2022, BBBY shares dropped precipitously from a close of $18.55 per share on August 18, 2022, to a close of $8.78 per share on August 23, 2022.