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Florida’s ‘Stop WOKE’ Act Gets Pushback in Court [1]

['Andrew Ross Sorkin', 'Vivian Giang', 'Stephen Gandel', 'Lauren Hirsch', 'Ephrat Livni', 'Jenny Gross']

Date: 2022-08-19  

A meme-stock payday

Five months after Ryan Cohen disclosed a 9.8 percent stake in Bed Bath & Beyond and started an activist campaign against the company, he has sold out completely. Cohen is walking away with millions, even as his reputation as king of the meme-stock traders takes a hit. Shares of Bed Bath & Beyond were down more than 40 percent premarket on Friday.

Cohen’s investment firm disclosed yesterday that it had sold off the entirety of its stake, just days after Bed Bath & Beyond’s shares surged as much as 70 percent in response to an updated regulatory filing outlining Cohen’s ownership of stock options with strike prices of $60, $75 and $80 per share. Cohen first disclosed owning those options in March. The company subsequently executed a stock buyback, ultimately making him a significant shareholder, and requiring him to file new disclosure forms. Cohen’s name attached to the filings was enough to set off a retail trading frenzy.

The timing of Cohen’s filing this week is puzzling. Bed Bath & Beyond first disclosed it had acquired additional shares in April, and securities rules dictate that insider forms be filed within days of anyone crossing the 10 percent ownership threshold. It’s possible that Cohen realized his stake had increased to a level requiring such disclosures only at the point when he was ready to sell. Shares of Bed Bath & Beyond had fallen about 40 percent since Cohen signed a settlement agreement with the retailer, but had been ticking up in recent weeks. Under rules governing the share sales of significant shareholders, an increase in trading volume meant Cohen could sell more stock. So it is possible that Cohen made his filing about options just because he was looking to cash in at least some of his holdings. Either way, cashing out when he did looks like a genius move this morning.

Cohen appears to have made nearly $57 million on his Bed Bath & Beyond investment. He initially paid $121 million for the stake, which climbed in value to $178 million in the end. He did lose just over $1.6 million on his options bet. But it is more likely that he purchased those options as a show of commitment to the company. He sold a portion of his stake on Tuesday, at prices ranging from about $18 to $26, the same day the shares spiked amid excitement over the news of his options position. He sold more shares, including those options, on Wednesday.

Will this tarnish Cohen’s crown as meme-stock king? Shares of GameStop, the retailer where he is chairman, were down about 6 percent yesterday and another 10 percent in after-hours trading. Over on Reddit’s WallStreetBets, one poster noted Cohen’s tweet from June about Wall Street executives “making millions while shareholders are left holding the bag,” and said it had “aged like milk.”

Celebrities, NFTs and disclosure

Celebrities on the NFT bandwagon are under pressure to be more transparent about their financial interest in the products they endorse on social media. The nonprofit group Truth in Advertising this month sent letters to representatives of stars across sports and media — including Tom Brady, Shaquille O’Neal, Snoop Dogg, Drake, Jimmy Fallon and Gwyneth Paltrow — demanding full disclosure when they promote non-fungible tokens.

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[1] Url: https://www.nytimes.com/2022/08/19/business/dealbook/florida-desantis-stop-woke-act.html

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