A volatile shareholder lawsuit that may have played a role in the shock suicide of former Bed Bath & Beyond chief financial officer Gustavo Arnal has recently run into its own problems.
The $1.2 billion lawsuit – which accuses the furniture retailer, its late chief financial officer, JPMorgan and a big investor of orchestrating a ‘pump and dump’ stock scheme – was recently assigned to a new law firm, even as legal experts question its prospects in court, The Post has learned.
Arnal, 52, jumped to his death on Sept. 2 from the 18th floor of the “Jenga Building,” a swanky luxury tower in Manhattan’s Tribeca neighborhood, while his wife was inside the apartment, which they reportedly rented for $18,500-a-month. Arnal was the father of two daughters.
Meanwhile, the lawsuit — which some media outlets have cited as contributing to the stress Arnal faced as the financially-troubled company’s chief financial officer — was filed Aug. 23 by a Falls Church, Va.-based attorney, who is both lawyer and plaintiff in the case – an unusual arrangement that usually presents a conflict of interest that would not pass with a judge, legal experts say.
The lawyer, Pengcheng Si, who specializes in immigration law, declined to comment on the “ongoing litigation” in an email to The Post. He also said he realizes “it’s emotion[al] hell for the family of Gustavo Arnal … I would like to express my sympathy and my condolences[s] for Mr. Arnal[‘s] the loss of family.
Filed in federal court in Washington, D.C., the lawsuit seeks class-action status and claims Si and his wife lost $106,480 due to a scheme concocted by Arnal and Bed Bath’s former biggest investor. & Beyond, billionaire Chewy.com founder Ryan Cohen. . The latter sold his shares between August 16 and 17 before the stock collapsed, taking $68 million.
During those same two days, Arnal sold more than 55,000 shares worth $1.4 million, according to the securities filings – transactions that the filings said were part of a pre-arranged plan put in place. in place in April.
On September 6, however, plaintiff Si hired class action law firm Cohen Milstein Sellers & Toll to take over the case, according to a public notice.
“Once [Si] learned how class action mechanisms work, he decided to step down as a lawyer,” his partner Steven Toll told The Post in an interview. “He was unaware of the challenges of being both plaintiff and attorney.”
The complaint alleges that Arnal had “strong communications” with JP Morgan and Cohen about “creating a buying frenzy of [the company’s’] stock,” and that JPMorgan helped Arnal and Cohen “launder the proceeds of their criminal conduct.”
The lawsuit, however, does not explain how Si, an individual investor, obtained the information, notes Richard Schoenstein, a Tarter Krinsky & Drogin securities attorney who is not affiliated with the case.
“The complaint does not reveal the source of the information regarding the allegations, which makes it vulnerable to rejection,” Schoenstein told the Post.
Indeed, Toll said, “I have no information on how he would have known about the conversations between Cohen and Arnal,” adding that Si might have “read it somewhere or heard about it from another person or he thinks it happened.”
Elsewhere, the trial erroneously named “Arnal Gustavo” as the accused throughout rather than “Gustavo Arnal”. In another instance, the lawsuit refers to the plaintiff, Si, as a woman — a mistake that will be corrected, according to her attorney.
Bed Bath & Beyond said in an email to The Post that it “is in the early stages of assessing the complaint, but based on current knowledge, the company believes the claims are without merit.” Representatives of Cohen’s investment firm, RC Ventures, declined to comment, as did representatives of JPMorgan.
According to Si’s biography on the website of his law firm – DWS Law Group – he is also referred to as Simon P. Si. Originally from China, Si’s biography indicates that in addition to immigration law, he “provides strategic advice on business creation, real estate, investment and international trade”.
Toll’s company has meanwhile started soliciting other plaintiffs to join the case. Si’s is the “first and ONLY” class action lawsuit “so far,” the law firm said in a public notice required by the SEC.
But there are at least several other major law firms seeking investors to be part of future class action lawsuits against Bed Bath & Beyond over similar allegations.
It’s unclear whether the claims, including Si’s, will replace Arnal as a defendant in the suit with his estate, Toll said.
“The question is whether it’s a good strategic move,” Toll said, adding “you wouldn’t do it unless you thought there was a lot of money in the estate. If [the estate] worth 10 or 50 million dollars, a lawyer would need to weigh that.