GameStop CEO Ryan Cohen loses bid to toss lawsuit accusing him of raking in $47M in profit from Bed Bath & Beyond stake sale

New York Post - Apr 21st, 2025

Ryan Cohen, CEO of GameStop and known for his role in the 2021 meme stock craze, is facing a lawsuit initiated by the former Bed Bath & Beyond, now rebranded as Beyond, to recover $47.2 million in profits from trading its stock. U.S. District Judge Naomi Reice Buchwald ruled that Cohen and his investment firm, RC Ventures, must defend against the claim that they bought and sold more than a 10% stake in Bed Bath within a six-month period, thus potentially making them liable for 'short-swing' profits as insiders. Cohen argued that he was unaware his stake exceeded 10% due to Bed Bath's quiet stock repurchasing, but the judge noted that the buyback program had been disclosed, suggesting it was unlikely Cohen made such a significant investment without reviewing these disclosures. Cohen's abrupt sale of his stake in August 2022 reportedly earned him $60 million. Neither Cohen's lawyers nor GameStop have commented on the lawsuit.

The lawsuit highlights significant issues about insider trading and the responsibilities of major stakeholders in publicly traded companies. Cohen, who has a net worth of $4.3 billion and founded Chewy, is a prominent figure in the investment world, attracting attention due to his involvement in the meme stock phenomenon. The case underscores the complexities of stock trading regulations and the potential repercussions for investors who may inadvertently breach them. This legal development follows Bed Bath's bankruptcy filing in April 2023, after which Overstock.com acquired its brand. The outcome of this case could have broader implications for how investor actions are scrutinized and regulated, particularly in cases involving significant financial gains amidst corporate bankruptcies.

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Story submitted by Fairstory

RATING

6.8

Fair Story

Consider it well-founded

The article provides a clear and timely account of the legal challenges faced by Ryan Cohen concerning his trading of Bed Bath & Beyond stock. It accurately reports the key facts of the case but could benefit from additional verification of Cohen's claims and more diverse sourcing. While the story is balanced and engages with significant issues of public interest, its impact is somewhat limited by a narrow focus on a single legal case. The article's clarity and readability are strengths, though it could enhance transparency and engagement by incorporating more perspectives and exploring broader implications. Overall, it effectively informs readers about a relevant legal proceeding involving a notable business figure while maintaining journalistic integrity.

Accuracy

The story accurately reports that Ryan Cohen, CEO of GameStop, must face a lawsuit regarding his trading of Bed Bath & Beyond stock, with claims of $47.2 million in profits. The article correctly states that US District Judge Naomi Reice Buchwald ruled Cohen must defend against claims of insider trading due to the short-swing profit rules. The factual basis of the story aligns with the legal proceedings cited, such as the dismissal of a previous lawsuit by former Bed Bath shareholders. However, the article does not provide verification for Cohen's claim of unawareness regarding his stake size, which remains a critical point needing further substantiation.

Balance

The article presents a balanced view of the legal proceedings involving Ryan Cohen, detailing both the claims against him and his defense. It mentions Cohen's assertion that he was unaware of exceeding a 10% stake due to the company's stock buyback. However, the story could improve by incorporating perspectives from legal experts or market analysts to provide additional context on the implications of the lawsuit. The absence of comments from Cohen's legal team or GameStop introduces a slight imbalance, as the narrative primarily reflects the plaintiff's viewpoint and the judge's comments.

Clarity

The article is well-structured and uses clear language to convey the complex legal issues surrounding the lawsuit. It logically presents the sequence of events, from Cohen's investment to the current legal proceedings. The use of straightforward language and a neutral tone aids in the reader's understanding of the situation. However, the article could benefit from a brief explanation of 'short-swing' profits to enhance clarity for readers unfamiliar with insider trading laws.

Source quality

The article references credible sources, such as the US District Court's proceedings and statements from Judge Naomi Reice Buchwald. However, it lacks direct quotes or responses from primary parties involved, like Cohen's legal representatives or the plaintiff's lawyer. The absence of these voices slightly diminishes the depth of source quality, as it relies heavily on court documents and lacks firsthand accounts or insights from involved parties.

Transparency

The article provides a clear overview of the lawsuit and the allegations against Cohen. However, it does not disclose the methodology behind the profit calculations or the specific legal standards applied in the case. Additionally, the story does not clarify any potential conflicts of interest or biases in its reporting, such as the financial interests of the involved parties. This lack of transparency in the underlying data and potential biases could affect reader trust.