USC student who made $110m on Bed Bath and Beyond spike denies working with CFO who killed himself
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A University of Southern California who made $110million from selling his Bed Bath and Beyond stocks says his parents are terrified that he will be kidnapped for his newfound wealth.
Jake Freeman, 20, an applied mathematics and economics major at the university, invested in nearly five million shares at $5.50 a share in July – selling them just a month later for $27.
Shares in the company today tumbled after their CFO Gustavo Arnal, 52, threw himself from the 18th floor of his Manhattan apartment last week after a lawsuit was lodged against him for insider trading.
It claimed that he worked with majority shareholder Ryan Cohen, chairman of GameStop, in the ‘pump and dump’ scheme, reportedly leaving others $1.2billion out of pocket.
Speaking exclusively to DailyMail.com, Freeman said: ‘My parents think I might be kidnapped, it’s something that’s on their minds.
‘I don’t think that its much of a risk. I go to USC so if they want to kidnap anybody, they can kidnap Obama’s daughter.
‘I think it’s funny that during a class my professor mentioned my existence but didn’t know I was in the class.
‘Overall people don’t really link two and two together. It’s not like the people in my classes follow the financial news that often.’
Jake Freeman, 20, an applied mathematics and economics major at the university, invested in nearly five million shares at $5.50 a share in July – selling them jsut a month later for $27 and cashed in more than $110million
Timeline shows when the three key investors bought stock in Bed Bath and Beyond – and when they sold to make tens of millions
Bed Bath and Beyond shares fell 15.12 per cent today to just over $7 per share, after the company announced it would save roughly $250 million in costs by closing 150 stores and laying off 20 per cent of staff
CFO Gustavo Arnal, 52, threw himself from his luxury Manhattan apartment last week after a lawsuit was lodged against him for insider trading
Shares for the company fell 15.12 per cent today to just over $7 per share, after the company announced it would save roughly $250 million in costs by closing 150 stores and laying off 20 per cent of staff.
Before the lawsuit was announced on August 23, Freeman cashed out after becoming a minority shareholder by owning around six percent of America’s largest houseware goods specialty stores.
It became the latest ailing retailer to see a surge in its value thanks to the ongoing ‘meme stock’ boom, and he pocketed $110million after filing on August 17 – the day after Arnal and Cohen also sold up.
Freeman spent a total of $25 million with the help of his wealthy pharmaceutical investor uncle, Scott Freeman, but denies that he had any links with Cohen.
He confirmed that he did talk about the market on Reddit, Twitter and GMEdd.com, making it into a ‘meme stock’ and encouraging others to invest on social media.
Shares started soaring after the renewed momentum on Reddit, with Freeman saying the interest in the shares caught him off guard and the price spiked far faster thanhe expected.
The student said: ‘I was really shocked that it went up so fast, it was initially a six-month plus plan but it worked out well for me.
‘I definitely did not talk to Cohen, and I’m very happy right now that I didn’t. I’m not going to comment with respect to any financial or regulatory investigations.
‘I can certainly say its unlikely that they did something that would be blatantly illegal probably had some rationale behind it.
In August 16, Cohen (pictured) filed a document to the Securities and Exchange Commission saying he owned 9,450,100 share, including 1,670,100 shares under certain call options
ccording to a lawsuit filed in federal court, majority shareholder in Bed Bath and Beyond Cohen approached Arnal about a ‘pump and dump’ scheme in which they would both profit
Arnal, right, is accused of providing misleading statements and omissions to the public in order to keep the share prices high. He is pictured with his family
Arnal plunged to his death from the 18th floor of the so-called Jenga building in Manhattan’s Tribeca neighborhood (pictured)
Bed Bath & Beyond will close 150 stores and lay off 20% of staff as sales plunge by a quarter
Retail chain Bed Bath & Beyond announced major layoffs late last month, as high inflation and a sagging economy hammer large US companies.
Bed Bath & Beyond, which has become the latest meme-stock darling for small traders on Reddit, announced plans to close 150 stores of its roughly 900 and lay off 20 percent of corporate and supply chain staff.
Sue Gove took over as interim CEO of Bed Bath & Beyond earlier this year
The big-box chain – once considered a so-called ‘category killer’ in home and bath goods – has seen its fortunes falter, with CEO Mark Tritton fired in June after sales plunged 25 percent in the first quarter.
The company hired Sue Gove, an independent board director, to replace him on an interim basis.
Gove said the retailer was ‘continuing to see significant positive momentum’ and intended to build its ‘deep heritage as a retailer.’
‘While there is much work ahead, our road map is clear and we’re confident that the significant changes we’ve announced today will have a positive impact on our performance’ she said on a conference call.
‘From a background point of view I don’t think that the lawsuit has a lot of substance, it’s highly unlikely that Ryan Cohen was communicating with the CFO.
‘I don’t see much advantage in doing that. I know how the law firm that Cohen used operated and I don’t think they would be very happy and would probably advise against that.
‘There is some potential issues with the timing but I don’t think its lawsuit worthy. I think the CFO dying will certainly complicate things.
‘I don’t think it’s going to change much it will continue on its way. He’s not there to defend himself so that might be another reason to press ahead.’
The student claims that his life hasn’t changed much since cashing in on the multi-million-dollar deal, saying that no one on his campus knows who he is.
Freeman, who lives off campus in an apartment with two others, added: ‘I still plan to do a PHD, I don’t have any plans for the money.
‘I very much value my education, I may obviously be some future investments down the line but that’s the extent of things.
‘I have been getting slightly better stuff from WholeFoods and going for a more interesting diet, more vegetarian stuff, I think it’s the oppositive of what people expect.
‘I’ve certainly got into sushi a little bit more than I did last year.’
Both Arnal and the company were sued over accusations of artificially inflating the firm’s stock price in a ‘pump and dump’ scheme.
The lawsuit, filed in the United States District Court for the District of Columbia, claims Cohen had approached Arnal about a plan to control shares of Bed Bath & Beyond so they could both profit.
Just one week after the damning lawsuit was filed, Arnal plunged to his death from the 18th floor of the so-called Jenga building in Manhattan’s Tribeca neighborhood.
Arnal is accused of agreeing to ‘regulate all insider sales by BBBY’s officers and directors to ensure that the market would not be inundated with a large number of BBBY shares at a given time.’
The suit alleges that Cohen offered to purchase a large stake in the company, including call options on more than 1.6 million shares with prices between $60 to $80.
Arnal jumped to his death from the 18th floor of a 57-story building in Manhattan’s Tribeca neighborhood on Friday
Arnal’s death was due to ‘multiple blunt force trauma’, a coroner concluded on Monday, and ruled it as a suicide
In exchange Arnal would ensure that insiders would not flood the market with the stock, with the pair accused of discussing their exit strategy with JP Morgan Securities LLC before selling their shares.
Arnal and Cohen filed a form saying they sold all their shares on August 16, the stock down 45 percent to $16.16.
Cohen filed a document to the Securities and Exchange Commission saying he owned 9,450,100 share, including 1,670,100 shares under certain call options.
It also claimed he held onto his April call options that would only begin to pay out if the stock hit $60 a share before January 20, 2023.
He was soon granted three seats on the board of the company, the lawsuit alleges, but had actually sold most of his shares in the company at that point.
The lawsuit also claims that as the CFO, Arnal knew about Cohen’s false filings with the SEC.
Stocks continued to plummet to $8.78 on August 23 — down more than 70 percent from its high of $30 a share.
By September 4, Bed Bath and Beyond was trading at just $8.63, with the company issuing a statement to say they were ‘in the early stages of evaluating the complaint, but based on current knowledge the company believes the claims are without merit.’
Cohen originally purchased his shares of Bed Bath & Beyond at an average of roughly $15.34 per share in March.
In a statement chairwoman Harriet Edelman said: ‘Our focus is on supporting Gustavo Arnal’s family and his team and our thoughts are with them during this sad and difficult time.’
The class action lawsuit was brought by Virginia resident Pengcheng Si on behalf of all those who purchased Bed Bath & Beyond stocks between March 25 and August 18.
In a statement to DailyMail.com she said: ‘I realize this is emotion hell for Gustavo Arnal’s family.
‘We are not able to comment on ongoing litigation, but I would like to extend my sympathy and condolence for Mr. Arnal family’s loss.’
Ryan Cohen has been unavaliable for comment.