Investing.com -- Ryan Cohen, GameStop (NYSE: GME )’s billionaire CEO, is being sued by the company formerly known as Bed Bath & Beyond (OTC: BBBYQ ). The lawsuit aims to recover $47.2 million in profits that Cohen made from trading the home goods retailer’s stocks before it declared bankruptcy.

On Friday, U.S. District Judge Naomi Reice Buchwald in Manhattan stated that Cohen and his company, RC Ventures, need to defend against allegations that they bought and sold more than a 10% stake in Bed Bath & Beyond within six months. This action, if proven, could make them liable to repay the profits earned from these "short-swing" trades.

Cohen has stated that he was unaware his stake in the company had exceeded 10% when he invested in March 2022. He attributed this oversight to the fact that Bed Bath & Beyond was silently buying back its own stocks at the time. However, Judge Buchwald noted that the retailer had announced its buyback program and found it hard to believe that Cohen would invest so heavily without reviewing such disclosures.

Cohen sold his stake in Bed Bath & Beyond abruptly in August 2022, earning an estimated profit of $60 million.

Judge Buchwald also dismissed a claim that the defendants were acting as "directors by deputization" because they had secured three seats on the Bed Bath & Beyond board in order to avoid a proxy fight.

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