NEW YORK, March 19, 2024 (GLOBE NEWSWIRE) -- Gainey McKenna & Egleston announces that a securities class action lawsuit has been filed in the United States District Court for the Central District of California on behalf of all persons and entities who purchased or otherwise acquired securities of B. Riley Financial, Inc. (“B. Riley” or the “Company”) (NASDAQ: RILY) between May 10, 2023 and November 9, 2023, both dates inclusive (the “Class Period”).
B. Riley is a financial services platform. The Company, through its subsidiaries, provides services including: investment banking, brokerage, wealth management, asset management, direct lending, business advisory, valuation, and asset disposition. B. Riley’s clients include public and private companies, financial sponsors, investors, financial institutions, and individuals.
Brian Kahn (“Kahn”) is a client of B. Riley and Chief Executive Officer of Franchise Group, Inc. (“FRG”). In May 2023, B. Riley entered into an agreement to assist Kahn in leading a management buyout of FRG. The $2.8 billion deal to take FRG private was completed on August 21, 2023. The transaction was partially financed by Nomura Holdings Inc. via B. Riley, who secured the financing allowing Kahn and other senior management of FRG to acquire the remaining 64% stake that they did not already own.
The Complaint alleges that Defendants failed to disclose to investors that: (1) Kahn had been credibly implicated in a conspiracy to defraud investors of millions of dollars; (2) in spite of this involvement, B. Riley continued to finance the transaction enabling Kahn and others to take FRG private through complex arrangements; and (3) the foregoing was reasonably likely to draw regulatory scrutiny to B. Riley.
On November 9, 2023, the Company revealed significant details concerning the FRG transaction and the years-long series of complex financial transactions between B. Riley, Kahn, and the Company’s respective subsidiaries, which culminated in the August 21, 2023 transaction. Analyzing these complex transactions, The Friendly Bear reported that “B Riley ended up funding 281MM of what was around a 560MM equity check. That’s over 50% ownership. Yet they claim to have only 31% voting rights. It looks like B Riley engaged in some funny business to avoid consolidation and placed control of FRG in the hands of the star of ‘Prophecy’ – Brian Kahn.” On this news, the Company’s stock price fell $4.47, or 14.8%, to close at $25.60 per share on November 10, 2023.
Investors who purchased or otherwise acquired shares of B. Riley should contact the Firm prior to the March 25, 2024 lead plaintiff motion deadline. A lead plaintiff is a representative party acting on behalf of other class members in directing the litigation. If you wish to discuss your rights or interests regarding this class action, please contact Thomas J. McKenna, Esq. or Gregory M. Egleston, Esq. of Gainey McKenna & Egleston at (212) 983-1300, or via e-mail at tjmckenna@gme-law.com or gegleston@gme-law.com.
Please visit our website at http://www.gme-law.com for more information about the firm.
