On August 23, 2022, ten days before leaving the luxurious skyscraper where he lived, the Venezuelan executive who served as financial director of Bed Bath & Beyond, Gustavo Arnold, was sued in a District of Columbia court in Virginia for allegedly violating federal securities laws and breaching fiduciary duty.
In the 24-page document, a Virginia resident named Pengcheng Si sues Bed Bath & Beyond, who was at the time the company’s principal investor, Ryan Cohen, his company, RC Ventures LLC, JP Morgan Securities and Gustavo Arnal, for “materially false statements” regarding the company’s financial health to investors and the Securities and Exchange Commission, in order to preserve the inflated value of the company before selling its shares.
The demand, which was analyzed by the digital team of News 41 it argues that shareholders lost regarding $1.2 billion due to the scheme, and that plaintiff Pengcheng Si personally lost more than $100,000.
Although Pengcheng Si signs the complaint, this is not alone, since the document presented by his lawyers establishes that it is a collective lawsuit, which is expected to be joined by all those who had bought shares of Bed Bath & Beyond between March 25 and August 18, 2022.
Investor Ryan Cohen sold his 10% stake in the company
The financial data analysis website MarketBeat reported that, in mid-August, Arnal sold more than 42,000 shares in Bed Bath & Beyond for around a million dollars And that, around the same time, Cohen sold his entire 10% stake in the company.
On August 23, these sales plunged the value of Bed Bath & Beyond’s shares, falling from a high of $30 per share to $8.78, causing many people who had bought shares in the company to suffer heavy losses.
The lawsuit contains no specific evidence of Arnal’s involvement in a Bed Bath & Beyond insider trading scheme, though in multiple paragraphs it emphasizes that there was “strong communication” regarding the scheme between him, Cohen and JPMorgan.
It also mentions that, in mid-August, Gustavo Arnal conspired with Cohen to “inflate and dump” the shares of Bed Bath & Beyond. Nevertheless, The Wall Street Journal recently reported that the Venezuelan executive’s shares were automatically sold, according to a plan pre-arranged in April with securities regulators.
Gustavo Arnal was “inundated” with emails
That same medium indicated that, as a result of the sale of his shares, and due to the restructuring of Bed Bath & Beyond, Arnal was working 18 hours a day, and was “inundated with emails from individual investors and plaintiffs’ lawyers”, and that the company is investigating and reviewing all such emails.
On September 2, the New York police authorities indicated that Gustavo Arnal jumped from the 18th floor of the luxurious building in which he lived.
So far, Bed, Bath and Beyond says it has seen no evidence of fraud, saying the lawsuit is without merit and staff are mourning the loss of their colleague.
Meanwhile, the retail company appointed Laura Crossen as their new principal. Crossen served as chief accounting officer within the company, before being named chief financial officer.
It is estimated that more than 10,000 class action lawsuits are filed in the United States each year.
If you know someone who may be going through circumstances of this nature: Suicide Assistance Center
Suicide Prevention Line: tel:135 (free line) or (011)5275-1135 o 0800 345 1435
Source: Univision 41 New York and The Wall Street Journal