The Bed Bath & Beyond Chief Financial Officer Gustavo Arnal, who was found dead on Friday after falling from the 18th floor of a New York City apartment building, recently was named in a lawsuit accusing him of fraud.
The incident occurred less than two weeks after the executive, 52, was named in a federal class-action lawsuit on allegations of federal securities fraud, insider trading, and breach of fiduciary duty, according to court documents.
His death also comes just days after Bed Bath & Beyond announced it is shuttering 150 stores and slashing 20% of its corporate staff.
Arnal is cited in the suit along with activist investor and GameStop chairman Ryan Cohen, who the lawsuit claims collaborated with the CFO in a “fraudulent scheme to artificially inflate the price of Bed Bath & Beyond’s publicly traded stock.”
The suit, filed in United States District Court for the District of Columbia on August 23, claims that Cohen and Arnal provided “materially false statements regarding the financial condition and holding situation” of Bed Bath & Beyond for their financial benefit. The lead plaintiff is investor Pengcheng Si.
“The defendants, knowing that the information they disclosed was false, took advantage of the inflated stock price and used fraudulent and misleading SEC filings to sell all their [Bed Bath & Beyond] shares and options at artificially inflated prices to unsuspecting and innocent public investors and then retained control of the profits,” the suit states.
On August 18, both Arnal and Cohen sold shares of the company, with Arnal selling more than 42,000 shares for an estimated $1 million, and Cohen selling the entirety of his 9.8% stake through his firm, RC Ventures, causing shares to plummet.
The lawsuit claims Cohen — who is also the co-founder of Chewy and chairman of GameStop — approached the CFO about his “pump and dump” scheme in March 2022, and “convinced Gustavo that their plan would be a mutually beneficial one.”
“Under this arrangement, defendants would profit handsomely from the rise in price and could coordinate their selling of shares to optimize their returns,” the lawsuit states.
Arnal allegedly worked with JPMorgan, which is listed as a defendant in the suit on claims the bank “aided and abetted” the plan by “enabling Cohen to use JPM’s accounts to effectuate such transactions and otherwise launder the proceeds of their criminal conduct.”
The lawsuit further notes Cohen’s involvement in similar plans, such as elevating GameStop to “meme stock” status.
“Cohen has historically employed pump and dump schemes to raise much needed capital and has ignited several meme stocks to jaw-dropping heights,” the lawsuit states.