MJP –
An SEC and Bloomberg article states that an investment banking firm is currently being investigated for engaging in illicit trading.
In the course of the inquiry into B. Riley Financial Inc., the company’s stock price has dropped by over 50%.
The investment bank’s disclosure of certain asset risks to investors is being investigated by the relevant authorities.
Bryant Riley, founder of B. Riley, and Brian Kahn, former CEO of Franchise Group Inc. (FRG), are both being investigated by the SEC.
Among B. Riley’s more substantial assets, you can find FRG.
Other insiders at B. Riley may also be the subjects of the SEC investigation into suspected wrongdoing in trading.
Retail clients who are short on cash and whose ability to repay may be in question have also prompted regulators to inquire about the status of receivables.
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A federal criminal investigation in New Jersey is ongoing at the same time as the SEC’s civil investigations, which involve attorneys in Philadelphia, Washington, and Los Angeles.
The 2020 collapse of the investment fund Prophecy Asset Management, which Brian Kahn was primarily responsible for managing, is the subject of this criminal inquiry.
B. Riley’s stock price took a major hit after hearing about the SEC inquiry; shares fell more than 54% to $7.73 a share during the trading session.
Concerns with B. Riley’s risk management methods, disclosures, and possible leadership and investment misconduct are highlighted by this multi-faceted regulatory examination of the firm.
In a lawsuit, disappointed Prophecy investors are asking if Kahn wrongfully utilized the funds to take over FRG. According to a recent Bloomberg article, Kahn was named as an unindicted co-conspirator after a co-founder of the fund pleaded guilty in November to a $294 million fraud case and is collaborating with authorities.
During a conference call with investors on Monday, Bryant Riley revealed that the company and he were served subpoenas in July by the SEC, with the primary focus being on B. Riley’s interactions with Kahn.
Bryant Riley assured the SEC that his company is complying completely and was responding to the subpoenas.
“Our internal investigation, with the assistance of two separate law firms, reached the same conclusion – that we had no involvement with or knowledge of any alleged misconduct concerning Brian Kahn or his affiliates.” We are convinced that the SEC will also reach this decision.
