Billionaire Investor Accused of Profiting Unfairly from Stock Deal
Ryan Cohen, the well-known billionaire investor and CEO of GameStop, is now facing serious legal trouble. A U.S. judge has ruled that Cohen must go to court over a shareholder lawsuit connected to his sale of stock in Bed Bath & Beyond. The lawsuit claims Cohen earned a huge profit—around $47 million—by selling shares in a way that may have violated securities laws.
This case has attracted a lot of attention because Cohen is a famous figure in the world of retail investing. He played a major role in the GameStop stock surge and has become a favorite among individual investors. But this time, he may have gone too far.
Cohen’s Investment in Bed Bath & Beyond
Back in March 2022, Ryan Cohen revealed that his investment firm, RC Ventures, owned a 9.8% stake in Bed Bath & Beyond. At the time, the company was struggling, and Cohen pushed for big changes. He publicly urged the company to sell off its Buy Buy Baby brand and suggested other strategies to boost its value.
His involvement excited investors and caused the stock price to jump. Many retail investors, inspired by Cohen’s past success with GameStop, followed his lead and poured money into Bed Bath & Beyond.
Just a few months later, in August 2022, Cohen sold all of his shares. His total profit was reportedly close to $60 million. But the sudden exit raised serious questions. Why would someone who just promoted big changes for a company suddenly cash out?
The Shareholder Lawsuit
The lawsuit claims that Cohen’s actions broke a key rule in U.S. securities law, known as the “short-swing” rule. This rule stops people who own more than 10% of a company—or who are considered insiders—from buying and selling stock in that company within a six-month period.
The rule is designed to prevent people with inside knowledge from making fast profits while regular investors are left in the dark.
The central question in the case is whether Cohen’s ownership actually crossed the 10% mark. While his initial stake was under that limit, the lawsuit claims his share rose above 10% because Bed Bath & Beyond was buying back its own stock at the time. Stock buybacks reduce the total number of shares available, which can increase the ownership percentage of existing shareholders.
Cohen argues that he didn’t know his ownership had gone over the 10% mark. But the judge wasn’t convinced.
What the Judge Said
U.S. District Judge Naomi Reice Buchwald ruled that Cohen must face the lawsuit. She said that the company’s stock buyback program was publicly announced and should have been known to him.
The judge added that Cohen and his firm had “full access to the facts” and that his defense lacked strong support. She also made it clear that the lawsuit could move forward under the short-swing rule, but dismissed other claims—like the idea that Cohen was acting as a director of the company without officially having that role.
Why This Matters to Investors
This case is important because it touches on the responsibilities of big investors. When people like Cohen buy or sell large amounts of stock, their actions can affect the market—and the wallets of regular investors.
When Cohen sold his shares in August 2022, Bed Bath & Beyond’s stock dropped by over 40%. Many everyday investors who had followed his lead lost a lot of money.
Some people felt betrayed, thinking Cohen had misled them. Others argue that investing always carries risk, and no one should blindly follow any investor—no matter how popular.
Either way, this lawsuit will test how far the law goes in protecting investors from sudden, high-profile trades.
Cohen’s Past Legal Battles
This isn’t the first lawsuit Cohen has faced over his Bed Bath & Beyond investment. In 2024, a similar shareholder lawsuit was filed but ended up getting dismissed. At that time, Bed Bath & Beyond had filed for bankruptcy, and the court said the plaintiffs no longer had any standing because their shares were wiped out during the bankruptcy process.
This time, however, the lawsuit is different. It is being brought on behalf of the company itself, and the judge believes it has enough merit to continue.
The Meme Stock Effect
Cohen became a star among retail investors during the 2021 “meme stock” wave. He took control of GameStop and led a turnaround effort that captured the imagination of online traders. His bold moves and sharp criticism of traditional corporate practices made him a hero to many in the Reddit investing crowd.
When he jumped into Bed Bath & Beyond, a lot of people expected a repeat performance. But the ending was very different. After his exit, the company’s value crashed, and it eventually went bankrupt.
Now, the lawsuit raises deeper questions about whether social media-driven investing and hype culture are safe strategies—or dangerous games.
What Happens Next?
The legal process will take time. For now, the lawsuit is only in its early stages. But it could have wide-reaching effects.
If Cohen is found to have broken the rules, he may be required to return the profits he made. That would send a strong message to other big investors about the risks of fast trading.
It could also lead to tighter rules on public disclosures and trading behavior, especially for influential figures like Cohen.
Final Thoughts
Ryan Cohen built a reputation as a fearless investor and retail investor favorite. But this lawsuit may damage that image. It also serves as a reminder that big profits often come with big responsibilities—and legal consequences.
As the case continues, investors will be watching closely. The outcome could shape how major shareholders behave in the future and whether retail investors continue to put their trust in high-profile figures.
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