Billionaire and Chewy co-founder Ryan Cohen is under investigation by federal regulators for his sudden sale of Bed Bath & Beyond during the height of the meme stock boom in 2022, wall street journal report on Thursday, citing unnamed people familiar with the matter.

Cohen bought a $121 million stake in Bed Bath & Beyond through his investment firm RC Ventures in the first quarter of 2022, but then suddenly Sell Just five months later, Bed Bath & Beyond soared on meme stock, netting him more than $60 million in profit, which he has since held.

During his tenure, Cohen used his roughly 10% stake in the struggling retailer to push for change. He named three new board members and said he wants to modernize Bed Bath & Beyond’s supply chain, ensuring it has a better product mix to attract customers, while floating the idea of ​​a potential sale, according to a person familiar with the matter. letter RC Ventures sent the Bed Bath & Beyond Board of wall street journal.

The Wall Street Journal did not list specific highlights of the SEC investigation.Cohen did not immediately respond wealthrequest for comment.

After Cohen bought its stock, it attracted thousands of retail investors to Bed Bath & Beyond. The billionaire is one of the leaders of 2021’s meme stock boom after taking control of ailing video game retailer and social media hit GameStop, where he remains chairman. Retail traders on Reddit Wall Street betting forums and other social media sites look for stocks that are highly shorted by investors in 2021 and 2022, dubbing them meme stocks. Their goal was to trigger a short squeeze by buying the company en masse, pushing up the stock price after forcing short sellers to exit their bearish bets. And it often works, albeit only temporarily.

But at Bed Bath & Beyond, many retail investors suffered big losses after Cohen sold his stake in the company. For example, in the days when Cohen sold his Bed Bath & Beyond shares in mid-August last year, retail investors bought a record $131 million worth of shares, Bloomberg report, citing data from Vanda Research. Then, shares of Bed Bath & Beyond fell 52% in just two days after Cohen revealed he had sold his stake.

Bed Bath & Beyond struggled until April 2023, when years of weak sales and significant losses forced management to file for Chapter 11 bankruptcy.

The company, which peaked in 2017 with a market cap of more than $17 billion, was eventually sold to Overstock.com for just $21.5 million. On July 30, the company closed its remaining 360 stores, as well as 120 Buy Buy Baby locations, which Cohen hailed as growth opportunities for the company through 2022.

The billionaire is being sued by Bed Bath & Beyond investors who claim he made public statements prior to the sale, including a tweet that read: smiling moon emoji A mention of a negative article about the company — amounting to a pump-and-dump scheme — left retail traders in the dust.

During the July proceedings, Washington, D.C. District Judge Trevor McFadden said meme stock investors likely “interpreted Cohen’s tweets as Cohen’s confidence in Bed Bath and encouraged them to take action.” action.”

Cohen denied those claims, saying he simply sold the shares because they had appreciated more than he expected and were overvalued, but Judge McFadden declined to dismiss the case in July, saying the billionaire Tycoon’s deal was “sketchy”.

“Fraudsters probably won’t escape responsibility just because they use emoji,” he added.

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