This Gamestop Messiah’s $47.2 Million Mistake Just Got Him Kneecapped In Court—Time for Payback…

So, Ryan Cohen—the guy Reddit turned into a messiah during the meme stock mania and who now moonlights as GameStop’s CEO—just got kneecapped in court. A federal judge ruled he can’t weasel out of a lawsuit accusing him of pulling a classic pump-and-dump move with Bed Bath & Beyond stock. The lawsuit, filed by the bankrupt husk of what used to be your mom’s favorite place to buy throw pillows, is trying to claw back $47.2 million in “short-swing” profits…and shockingly enough, it looks like they might actually get a shot. 

(Source: Giphy) 

In short, back in 2022, Cohen bought a big stake in Bed Bath that amounted to more than 10%, which legally put him in “insider” territory. Then, just a few months later, he bailed. Cashed out. Pocketed somewhere in the neighborhood of $60 million. Perfectly legal if you’re a random retail trader. A little less legal if you’re considered an insider and sell the stock within six months. That’s where the whole “short-swing profits” rule kicks in. It’s basically the SEC’s way of saying, “If you’re close enough to know what’s going on behind the curtain, you don’t get to trade like a degenerate.” Aaaaand that’s exactly what Cohen did. 

Of course, Cohen says he didn’t know he had over 10% ownership because Bed Bath was buying back its own shares at the time. The judge, U.S. District Judge Naomi Reice Buchwald, called B.S., saying it “strains credulity” to suggest Cohen didn’t know. Translation: you’re either lying, or you’re too lazy to read a 10-K, and neither looks great when you’re running a public company.

(Source: New York Post) 

For the record, Bed Bath had publicly disclosed its buyback program, so unless Cohen was blindfolded with his fingers in his ears while deploying capital, it’s hard to imagine he didn’t know what was up. The judge also tossed out a separate claim that Cohen was a “director by deputization,” since RC Ventures got three board seats in a deal to avoid a proxy fight. That part didn’t stick. The insider trading angle though, well that’s alive and kicking. 

Now to be fair, it’s worth remembering that Cohen is still considered a folk hero to a bunch of retail investors who think “diamond hands” is a real investing strategy. The guy made his name building Chewy into a legit e-commerce beast, then leaned into the chaos of meme stocks like it was his higher calling. Now he’s steering Gamestop—another company that’s been circtinling the drain for years—while defending himself in court for allegedly fleecing a dying retailer on the way out. 

(Source: Investing.com) 

What’s actually interesting here is that Bed Bath filed for bankruptcy in April 2023 only for Overstock to buy the name and slap it onto their own ecommerce site. However the shareholders who originally tried to sue Cohen got blocked when the bankruptcy wiped out their claims. So now the bankrupt entity itself is going after him. Because when your company’s dead, and your brand has been sold off for spare parts, what else is left besides suing the guy who made off with millions right before the lights went out LOL.

If Cohen’s smart, he’ll settle this quietly and avoid turning the whole thing into another meme clown show. But if he goes full send and fights it out, don’t be surprised if Reddit starts passing around court transcripts like baseball cards. At the end of the day, this is just another reminder to cross your T’s and dot your I’s, even when you try to manipulate the system. Because at its core, the SEC doesn’t care how many board seats you negotiated or how many Twitter followers call you a legend. They care about rules. And if you break those rules and make $47 million doing it, they’re going to want a word. 

(Source: Giphy) 

For now, keep your eyes on this story and keep your eyes on Gamestop. It’s only a matter of time before this thing ends up triggering some kind of “narrative” that makes Gamestop soar again. Until next time, friends…

P.S. Oh, I’m sorry, I didn’t know you liked getting rekt. Let’s face it, retail investors get the short end of the stick all day everyday. It’s the smart money’s world, and we are just living in it–only useful when it comes to liquidity purposes in the market. Meaning, if you’re as pissed off as I was when I found out Milli Vanilli was lip syncing the whole time, then it’s time to go from investing blind, to investing smart. Luckily for you, the key is right here as a Stocks.News premium member. Click here to see exactly how our premium members are printing while others quake in the face of today’s market chaos. 

Stocks.News does not hold positions in companies mentioned in the article.