Investor Ryan Cohen might have run afoul of disclosure guidelines in his surprise sale of Bed Bath & Beyond Inc. stock this month, securities lawyers said, but regulatory action against him appears unlikely, the Wall Street Journal reported. Cohen sold his entire stake in the home-goods retailer on Aug. 16 and 17, just months after he took a significant position in the company and pledged to force changes there. Shares tumbled after news of his sales came out on the afternoon of the 17th, but meanwhile Cohen benefited from a huge surge in volume that enabled him to sell millions of shares while prices rose. An ownership disclosure that Cohen filed on the morning he began selling included a trivial update about the size of his holdings and said he hadn’t done any trading in Bed Bath & Beyond during the prior 60 days. The SEC requires activist investors to file the ownership disclosure, known as a 13D, when they acquire at least 5% of a company’s shares and plan to influence or control the company. SEC rules dictate that investors must promptly update the form to reflect any material changes to what they first disclosed, such as new plans to buy or sell shares. Within minutes or hours of the ownership disclosure, Cohen began selling. Individual investors “have no idea he is dumping the stock against them,” said Joshua Mitts, a law professor at Columbia University who specializes in analytical research on trading strategies. The Securities and Exchange Commission could investigate whether Cohen had a plan to sell before he filed the Aug. 16 update that he should have disclosed, according to former regulators and law professors who specialize in securities law. The SEC’s enforcement division hasn’t contacted him, according to a person familiar with the matter. (Subscription required.)
