Bed Bath & Beyond’s chief financial officer who fell to his death Friday in New York City had been accused of orchestrating a “pump and dump” scheme to inflate his company’s stock price, according to a lawsuit.
Gustavo Arnal, 52, as well as billionaire investor Ryan Cohen, are listed as defendants in the lawsuit that claims the two collaborated in a “fraudulent scheme to artificially inflate the price of Bed Bath & Beyond’s publicly traded stock,” according to court documents cited by multiple outlets.
The lawsuit claims that Mr. Arnal and Mr. Cohen made “materially false statements” about the company’s financial health to investors and the Securities and Exchange Commission in order to preserve the company’s inflated value before selling their shares.
Stock market and financial data analysis website MarketBeat reported that Mr. Arnal had sold more than 42,000 shares in Bed Bath & Beyond for about $1 million in mid-August. Mr. Cohen sold his entire 10% stake in the company around that same time.
The sell-off tanked Bed Bath & Beyond’s stock value, dropping it from a high of $30 a share down to $8.78 a share on Aug. 23, when a group of the company’s shareholders filed a federal class action lawsuit in the United States District Court for the District of Columbia.
Ten days after the lawsuit was filed, Mr. Arnal plunged to his death from a Manhattan condo building.
Virginia resident Pengcheng Si is the lead plaintiff in the case. He filed the lawsuit on behalf of all those who purchased Bed Bath & Beyond stocks between March 25 and Aug. 18.
The lawsuit argues that shareholders lost out on around $1.2 billion due to the scheme.
JPMorgan is also implicated in the lawsuit for “enabling Cohen to use JPM’s accounts to effectuate such transactions and otherwise launder the proceeds of their criminal conduct,” the filing reads.
Last week, Bed Bath & Beyond announced plans to close about 150 stores and cut its corporate workforce by 20%.
In June, chief executive Mark Tritton was replaced by board member Sue Gove.