An explosive shareholder lawsuit which will have played a job within the shocking suicide of Bed Bath & Beyond’s former financial chief Gustavo Arnal has recently run into trouble of its own.
The $1.2 billion suit — which accuses the home-furnishings retailer, its late CFO, JPMorgan and a giant investor of orchestrating a “pump and dump” stock scheme — was recently handed over to a latest law firm, at the same time as legal experts query its prospects in court, The Post has learned.
Arnal, 52, jumped to his death on Sept. 2 from the 18th floor of the “Jenga Constructing,” an elegant luxury tower in lower Manhattan’s Tribeca neighborhood, while his wife was contained in the apartment, which they reportedly were renting for $18,500-a-month. Arnal was a father to 2 daughters.
Meanwhile, the suit — which some media reports have cited as contributing to the stress Arnal was facing because the CFO of the financially embattled company — was filed Aug. 23 by an attorney based in Falls Church, Va. who’s each the counsel and the plaintiff within the case — an unusual arrangement that typically presents a conflict of interest that wouldn’t pass muster with a judge, based on legal experts.
Gustavo Arnal joined the retailer in 2020.
The attorney, Pengcheng Si, who focuses on immigration law, declined to comment on “ongoing litigation” in an email to The Post. He also said he realizes “that is emotion[al] hell for Gustavo Arnal’s family … I would really like to increase my sympathy and condolence[s] for Mr. Arnal[‘s] family’s loss.”
Filed in federal court in Washington, DC, the grievance is looking for class-action status and claims that Si and his wife lost $106,480 due to a scheme cooked up by Arnal and Bed Bath & Beyond’s former largest investor, Chewy.com’s billionaire founder Ryan Cohen. The latter sold his shares between Aug. 16 and 17 before the stock crashed, bagging $68 million.
On those self same two days, Arnal sold greater than 55,000 shares price $1.4 million, based on securities filings — transactions that the filings claimed had been a part of a pre-arranged plan arrange in April.
The Jenga constructing at 56 Leonard St. where Arnal lived.Robert Miller
On Sept. 6, nevertheless, the plaintiff Si hired law firm Cohen Milstein Sellers & Toll, which focuses on class-action litigation, to take over the case, based on a public notice.
“Once [Si] learned how the class-action mechanisms work, he decided to withdraw as counsel,” partner Steven Toll told The Post in an interview. “He wasn’t aware of the challenges of being each a plaintiff and counsel.”
The grievance alleges that Arnal had “heavy communications” with JP Morgan and Cohen about “making a buying frenzy of [the company’s’] stock,” and that JPMorgan helped Arnal and Cohen “launder the proceeds of their criminal conduct.”
The suit doesn’t, nevertheless, lay out how Si, a person investor, got the data, notes Richard Schoenstein, a securities attorney for Tarter Krinsky & Drogin who isn’t affiliated with the case.
“The grievance doesn’t reveal the source of the data regarding the allegations which makes it vulnerable to being dismissed,” Schoenstein told The Post.
Ryan Cohen sold his shares in Bed Bath & Beyond between Aug. 16 and 17, bagging $68 million.Twitter/Ryan Cohen
Indeed, Toll said, “I don’t have any information on how he would have knowledge of conversations between Cohen and Arnal,” adding that Si might need “read it somewhere or heard about it from one other person or he believes it happened.”
Elsewhere, the suit erroneously named “Arnal Gustavo” as a defendant throughout quite than “Gustavo Arnal.” In one other instance, the suit refers back to the plaintiff, Si, as a female — a mistake that can be corrected, based on his lawyer.
Bed Bath & Beyond said in an email to The Post that it “is within the early stages of evaluating the grievance, but based on current knowledge the corporate believes the claims are without merit.” Reps for Cohen’s investment firm RC Ventures declined to comment as did reps for JPMorgan.
Gustavo Arnal jumped to his death from the 18th floor of his luxury apartment constructing in Tribeca.Robert Miller
Based on Si’s bio on his law firm’s web page – DWS Law Group – he can be known as Simon P. Si. A native of China, Si’s bio says along with immigration law he “provides strategic advice on business formation, real estate, investment and international trade.”
Toll’s firm has meanwhile begun soliciting other plaintiffs to hitch the case. Si’s is the “first and ONLY” class motion lawsuit “up to now” the law firm said in a public notice required by the SEC.
But there are at the very least several other big law firms fishing for investors to be a part of future class motion lawsuits against Bed Bath & Beyond over similar allegations.
It’s not clear whether the complaints, including Si’s, will replace Arnal as a defendant within the grievance together with his estate, Toll said.
“The query is whether or not it’s a superb strategic move,” Toll said, adding “you wouldn’t do this unless you thought there was lots of money within the estate. If [the estate] is price $10 or $50 million a lawyer would want to weigh that.”