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B. Riley (RILY) Shares Fall After Short Seller Questions Company's Ties to FRG Executive Linked to Criminal Investigation - Hagens Berman
Globe Newswire 11-Jan-2024 10:17 AM
SAN FRANCISCO, Jan. 11, 2024 (GLOBE NEWSWIRE) -- Hagens Berman urges B. Riley Financial, Inc. (NASDAQ:RILY) investors who suffered substantial losses to submit your losses now.
B. Riley Financial, Inc. (NASDAQ:RILY) Investigation:
"We are investigating the accuracy of B. Riley's statements concerning Franchise Group ("FRG") and knowledge of Brian Kahn's alleged activities," said Reed Kathrein, the Hagens Berman partner leading the firm's investigation.
On Aug. 28, 2023, B. Riley announced it invested $216.5 million in an equity financing to facilitate the $2.8 billion management-led acquisition of FRG, a formerly public company controlled by Brian Kahn.
Questions about B. Riley's FRG investment began to arise on Nov. 2, 2023, when the DOJ announced that co-founder of hedge fund Prophecy Asset Management John Hughes had pled guilty to conspiring to defraud dozens of victim investors out of $294 million. Bloomberg later reported that FRG's CEO Brian Kahn is one of two co-conspirators and Reuters reported that Hughes named Kahn as a co-conspirator.
In the aftermath, B. Riley has marked down the value of its investment in FRG.
In response to inquiries concerning the allegations against Mr. Kahn, B. Riley CEO Bryant Riley stated, "I've known Brian for many years and had no direct experience with what has been alleged. We learned of this matter late last week like many others and we continue to closely monitor relevant developments."
But on Dec. 11, 2023, in connection with B. Riley inaugural analyst day, activist short seller The Friendly Bear released a slide presentation entitled "Question for B. Riley Analyst Day," alleging B. Riley is likely withholding information regarding Kahn.
The presentation alleges that in Fall 2018, B. Riley loaned $30 million to a company jointly owned by Kahn, which loan it later assigned to a Kahn-owned hedge fund. The presentation further observes that B. Riley's CEO Bryan Riley and President Kenneth Young abruptly resigned from FRG' Board immediately after Deloitte resigned as auditor of Prophecy. Based on these and other factual "coincidences," The Friendly Bear posits, "We believe Bryant Riley was not being fully forthcoming about his entanglements with Kahn."
The Friendly Bear's presentation also alleges that B. Riley used related party transfers and sham loans to avoid marking down distressed legacy loans.
These events have caused the price of RILY shares to decline sharply.
If you invested in B. Riley and have substantial losses, or have knowledge that may assist the firm's investigation, submit your losses now »
If you'd like more information and answers to frequently asked questions about the B. Riley investigation, read more »
Whistleblowers: Persons with non-public information regarding B. Riley should consider their options to help in the investigation or take advantage of the SEC Whistleblower program. Under the new program, whistleblowers who provide original information may receive rewards totaling up to 30 percent of any successful recovery made by the SEC. For more information, call Reed Kathrein at 844-916-0895 or email RILY@hbsslaw.com.
About Hagens Berman Hagens Berman is a global plaintiffs' rights complex litigation law firm focusing on corporate accountability through class-action law. The firm is home to a robust securities litigation practice and represents investors as well as whistleblowers, workers, consumers and others in cases achieving real results for those harmed by corporate negligence and fraud. More about the firm and its successes can be found at hbsslaw.com. Follow the firm for updates and news at @ClassActionLaw.
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