NEW YORK, March 12, 2024 (GLOBE NEWSWIRE) -- Wolf Popper LLP is investigating potential derivative claims on behalf of shareholders of B. Riley, Inc. (“B. Riley”) (NASDAQ: RILY) against members of B. Riley’s senior management and its Board of Directors concerning B. Riley’s relationship with Brian Kahn, Chief Executive Officer of Franchise Group, Inc. (“FRG”). A derivative action seeks to recover damages on behalf of a corporation, and is different than the pending securities fraud class action seeking to recover damages on behalf of investors during the class period May 10, 2023 through November 9, 2023, inclusive. Unlike the pending class action, which seeks to benefit only investors during the class period, a derivative action seeks to benefit all existing B. Riley shareholders.
In May 2023, B. Riley entered into an agreement to assist Brian Kahn in leading a management buyout of FRG. The deal was completed in August 2023. On November 2, 2023, Kahn was implicated as an unnamed coconspirator in a conspiracy to defraud $294 million in funds from investors in Prophecy Asset Management. B. Riley has acknowledged that it had invested $281.1 million in the management buyout and had made a separate $201 million loan to Kahn’s investment firm secured by Kahn’s ownership interest in FRG common stock. According to The Wall Street Journal, combined, the stated value of the loan and the equity stake exceeds B. Riley’s shareholder equity. On February 22, 2024, B. Riley’s Board of Directors issued a press release reporting that its Audit Committee had hired “outside counsel at Sullivan & Cromwell LLP to conduct a thorough, internal review of Mr. Kahn’s dealings with B. Riley” and that the “review confirmed … that the Company and its executives … had no involvement with, or knowledge of, any of the alleged misconduct concerning Prophecy.” However, according to an earlier August 28, 2023 company press release, Sullivan & Cromwell had “served as legal counsel to B. Riley in connection with its investment in FRG and the credit facility.” At least one investor (albeit a short seller) has questioned the propriety of retaining Sullivan & Cromwell to review a transaction where it had served as counsel for B. Riley.
The revelation of these facts concerning B. Riley’s exposure to Kahn and FRG has resulted in B. Riley’s stock price plummeting from a high of $59.13 a share on July 26, 2023 to close on March 12, 2024 at $20.69 per share.
B. Riley shareholders seeking more information about Wolf Popper’s investigation can contact Adam Savett at (212) 451-9655 or asavett@wolfpopper.com.
Wolf Popper has successfully recovered billions of dollars for defrauded investors. Wolf Popper’s expertise has been repeatedly recognized by courts that have appointed the firm to major positions in securities litigation. For more information about Wolf Popper, please visit the Firm’s website at www.wolfpopper.com.
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Wolf Popper LLP
Adam Savett, Esq.
845 Third Avenue
New York, NY 10022
Tel.: (212) 451-9655
Email: asavett@wolfpopper.com
