The US Securities and Exchange Commission (SEC) is
investigating B. Riley’s role in a buyout of Franchise Group Inc. (FRG), a deal that was orchestrated by an individual linked to the collapse of the Prophecy Asset
Management hedge fund and partially financed by Nomura Holdings Inc., Bloomberg
reported.
The SEC’s interviews highlight how Brian Kahn’s
assets were utilized as collateral for Nomura’s financing of the buyout of FRG. This
development has impacted B. Riley’s shares, attracting attention from
short-sellers anticipating a downturn.
The Connection with Nomura
Amidst this turmoil, B. Riley maintains its stance,
stated that it has yet to receive any official communication from the SEC. The
company has emphasized its commitment to cooperate in regulatory inquiries,
dispelling concerns while expressing frustration at what it perceives as
aggressive tactics by short-sellers.
The SEC’s scrutiny extends beyond B. Riley,
encompassing bebe stores inc., a women’s clothing chain controlled by B. Riley.
Investigations seek to unravel the connections between bebe stores, B. Riley,
and Kahn, adding complexity to this unfolding matter.
According to Bloomberg, as the investigations by the securities watchdog continue, the wider implications of these connections become
increasingly apparent.
B. Riley’s Response
In Response to this matter, B. Riley has denied
involvement in any investigation by the SEC. The company, known for its
diversified financial services platform, has termed the claims by the media
publication as “baseless.” Notably, the SEC declined to comment on the matter.
However, B. Riley has reiterated its commitment to cooperation should an
investigation materialize.
This is not the first time B. Riley Financial has
faced such accusations. In November 2023, the firm disassociated itself from
the investigation against Prophecy, asserting no prior knowledge or involvement in this matter. B. Riley maintains that the current resurgence of
allegations appears to be an ongoing effort by short sellers to disseminate
misinformation for personal gain.
“In its official statement, the company
mentioned: As B. Riley stated in November 2023 when it first learned
of the Prophecy investigation, B. Riley Financial had no involvement with, or
knowledge of, any of those matters. The short sellers continue to
disseminate false information for their own profit to the detriment of the firm’s clients and customers.”
This article was written by Jared Kirui at www.financemagnates.com.
