Investing.com -- Billionaire Ryan Cohen is being investigated by the Securities and Exchange Commission over his decision to sell shares in Bed Bath & Beyond during a spike in excitement over so-called meme stocks, the Wall Street Journal has reported.
Citing people familiar with the matter, the paper said the regulator has asked Cohen for information about his trades as well as communications with officers and directors at the home goods company. The SEC is also seeking records from its former and current board members, the WSJ added.
Cohen raked in a profit of almost $60 million from his sale of an 11.8% stake in Bed Bath & Beyond in August 2022, which came only days after he posted positively about the business on social media.
A figure followed closely by many retail investors, Cohen had previously taken an interest worth $120M in Bed Bath & Beyond in March 2022 -- a move that was viewed as a push to bring sweeping changes to the retail chain. The purchase sparked a rush of trading that sent the firm's share price up by 34% in one day.
The stock was given a later boost on August 12 last year when Cohen tweeted a picture of the face of the moon in response to a negative news story. Days after this message, Cohen sold his holdings in Bed Bath & Beyond.
In a lawsuit filed in Washington D.C. federal court, a group of investors have alleged that Cohen knew bad news about the company and used the tweet to spread misinformation to inflate the stock before the sale. A U.S. judge has called the trading actions "sketchy," although Cohen has denied that he misled the market.
Bed Bath & Beyond filed for bankruptcy in April and has shuttered hundreds of locations in the last year.