Whitney Tilson Files Complaint with SEC Against Cohen for 'Likely' Bed Bath & Beyond (BBBY) 'Pump and Dump'

August 18, 2022 12:02 PM EDT

Get inside Wall Street with StreetInsider Premium. Claim your 1-week free trial here.

Former hedge fund manager and Empire Research newsletter writer, Whitney Tilson, said he filed a complaint with the SEC about Ryan Cohen for his "likely pump and dump" of Bed Bath & Beyond (NASDAQ: BBBY) after he filed to sell his 9.5 million shares.

Tilson said this is the first time he has ever done this as Cohen's trading patterns on BBBY "stink to high heaven, and may be a classic pump and dump"

From Tilson:

1) In yesterday's e-mail, I highlighted the absurd and unwarranted run-up in the stock of struggling retailer Bed Bath and Beyond (BBBY), which I think is in a death spiral because it likely doesn't have enough liquidity to build inventory for the holidays and will therefore have to file for bankruptcy.

I concluded by predicting that:

Today's spike in BBBY smells like a blow-off top to me, and I expect the stock will be back under $10 per share very soon.

Sure enough, the stock is crashing today on news that Ryan Cohen, the founder of Chewy (CHWY) and the chairman of GameStop (GME), whose 11.8% stake in BBBY excited the WallStreetBets speculators on Reddit, disclosed in an SEC filing yesterday that he may dump his entire stake (and may, I suspect, have done so yesterday): Bed Bath & Beyond shares fall after investor Ryan Cohen reveals intent to sell entire stake.

Cohen's trading patterns stink to high heaven, and may be a classic pump and dump. Here's why...

First, on Monday, Cohen filed a Form 3 showing that he had bought far-out-of-money call options that expire in January with strike prices of $60, $75, and $80 per share, multiples of the $10 to $15 share price at the time.

This highly aggressive, bullish-seeming bet caused the stock to soar on Tuesday: Bed Bath & Beyond soars as much as 70% as meme traders talk up Ryan Cohen's call options purchase.

Then, Cohen added fuel to the fire by filing an amended 13D showing that he owned 9.45 million shares of BBBY's stock. But this was unnecessary because it was unchanged from his previous 13D filing on March 25, so I think he filed it to cause a further run-up in the stock.

Having successfully pumped the stock up 100% to 200% in a couple of days, Cohen is dumping/has dumped it on the unsuspecting retail investors who foolishly got caught up in the hype he generated.

What a total disgrace!

This morning I did something I've never done before: I reported Cohen's actions to the SEC using its website to "Report Suspected Securities Fraud or Wrongdoing" and checked the boxes for "manipulation of a security" and "pump and dump scheme." I hope the SEC investigates...

Serious News for Serious Traders! Try Premium Free!

You May Also Be Interested In

Related Categories

Hedge Funds, Trader Talk

Related Entities

13D, Whitney Tilson, T2 Partners