PHILADELPHIA, Feb. 28, 2024 (GLOBE NEWSWIRE) -- Berger Montague advises investors that a securities fraud class action lawsuit has been filed against B. Riley Financial, Inc. (“B. Riley” or the “Company”) (NASDAQ: RILY) on behalf of purchasers of B. Riley’s common stock between May 10, 2023 and November 9, 2023, inclusive (the “Class Period”).
Investor Deadline: Investors who purchased or acquired B. Riley securities during the Class Period may, no later than March 25, 2024, seek to be appointed as a lead plaintiff representative of the class. For additional information or to learn how to participate in this litigation, please contact Berger Montague: James Maro at jmaro@bm.net or (267) 637-3176, or Andrew Abramowitz at aabramowitz@bm.net or (215) 875-3015 or CLICK HERE.
B. Riley is a financial services platform. The Company, through its subsidiaries, provides such services as investment banking, brokerage, wealth management, asset management, direct lending, business advisory, valuation, and asset disposition.
In May 2023, B. Riley entered into an agreement to assist its client Brian Kahn (“Kahn”) in leading a management buyout of Franchise Group, Inc. (“FRG”), of which Kahn was the Chief Executive Officer. The $2.8 billion deal to take FRG private was completed on August 21, 2023. The transaction was partially financed by Nomura Holdings Inc. (“Nomura”) via B. Riley, who secured the financing that allowed Kahn and other members of FRG's senior management acquire the remaining 64% stake that they did not already own.
However, on November 2, 2023, Kahn was implicated as an unnamed co-conspirator in a conspiracy to defraud investors of $294 million in funds. Specifically, the U.S. Department of Justice (“DOJ”) announced that Prophecy Asset Management (“Prophecy”) president John Hughes (“Hughes”) had pled guilty to the charge with two unnamed co-defendants, and the SEC filed a complaint against Hughes for the same misconduct. Bloomberg reported on that same day that Kahn had been identified by “a person familiar with the matter” as one of the unnamed conspirators.
On November 3, 2023, after the market closed, financial analyst The Friendly Bear tweeted that the DOJ’s “charging document clearly implicates [Kahn] in Hughes’ crime. There is a high chance of indictment here.”
Following this news, B. Riley’s stock price dropped $9.02, or 22%, to close at $32.54 per share on the next trading day, November 6, 2023.
Then, on November 9, 2023, after the market closed, the Company revealed significant details concerning the FRG transaction and the complex financial transactions between B. Riley, Kahn, and the Company. Analyzing these 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.”
Following this news, B. Riley’s stock price fell $4.47, or 15%, to close at $25.60 per share on November 10, 2023. The Company’s stock price continued to fall $4.59, or 14%, over the next trading session to close at $22.01 per share on November 13, 2023.
According to this lawsuit, throughout the Class Period, the 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.
A lead plaintiff is a representative party who acts on behalf of all class members in directing the litigation. The lead plaintiff is usually the investor or small group of investors who have the largest financial interest and who are also adequate and typical of the proposed class of investors. The lead plaintiff selects counsel to represent the lead plaintiff and the class and these attorneys, if approved by the court, are lead or class counsel. Your ability to share in any recovery is not, however, affected by the decision whether or not to serve as a lead plaintiff. Communicating with any counsel is not necessary to participate or share in any recovery achieved in this case. Any member of the purported class may move the Court to serve as a lead plaintiff through counsel of his/her choice, or may choose to do nothing and remain an inactive class member.
Berger Montague, with offices in Philadelphia, Minneapolis, Delaware, Washington, D.C., San Diego, San Francisco and Chicago, has been a pioneer in securities class action litigation since its founding in 1970. Berger Montague has represented individual and institutional investors for over five decades and serves as lead counsel in courts throughout the United States.
Contacts:
James Maro, Senior Counsel
Berger Montague
(267) 637-3176
jmaro@bm.net
Andrew Abramowitz, Senior Counsel
Berger Montague
(215) 875-3015
aabramowitz@bm.net
