More details have emerged regarding Gustavo Arnal, 52, the Bed Bath & Beyond CFO who plunged 18 stories from a New York City building to his death last week.
According to Fox Business, Arnal was reportedly part of an investigation into a “class-action lawsuit alleging that he and majority shareholder, GameStop Chairman Ryan Cohen, had artificially inflated the company’s value in a ‘pump and dump’ scheme.”
Cohen and Arnal were accused of collaborating to inflate the company’s share price artificially.
Just days before the executive’s death by apparent suicide, the company announced a last-ditch effort to stay afloat, which included shredding some 20% of its workforce, a new round of loans, and the closure of 150 of its 900 retail stores.
The class-action lawsuit, filed last month in the United States District Court for the District of Columbia, revealed more details.
“With control over a significant portion of the public float, Cohen would essentially act as a price support for the stock while Gustavo would act in a similar capacity by controlling the sale of shares by Insiders,” the lawsuit filing read.
It added: “Under this arrangement, defendants would profit handsomely from the rise in price and could coordinate their selling of shares to optimize their returns.”
Cohen reportedly executed a series of buys that accumulated 1.6 million shares, which the suit said was a “classic attempt to spark a gamma squeeze, in exchange for Gustavo’s assurance that Insiders would not flood … the market with the stock.”
The lawsuit claims Gustavo Arnal inflated the company’s stock price with false information. Shares of Bed Bath & Beyond fell 65% to $8.63. First half of August, they jumped 600%, to more than $30. When the shares peaked, Arnal sold stock worth more than $1 million.
– pp.El Pais
— Dr. James E. Olsson (@DrJamesOlsson) September 5, 2022
The class-action lawsuit involved many parties — individuals who claimed they lost massive sums of money due to buying the stock at the artificially inflated price, to large firms like JP Morgan, to the tune of $1.2 billion.
The New York Post added:
Other defendants in the suit include JP Morgan Securities, which is accused of helping Cohen and Arnal “effectuate” their sales “and otherwise launder the proceeds of their criminal conduct.”
Only time will what comes of the massive lawsuit, but it’s certainly off to a tragic start.