SHAREHOLDER ALERT: Pomerantz Law Firm Reminds Shareholders with Losses on their Investment in B. Riley Financial, Inc. of Class Action Lawsuit and Upcoming Deadlines - RILY
NEW YORK, March 19, 2024 /PRNewswire/ -- Pomerantz LLP announces that a class action lawsuit has been filed against B. Riley Financial, Inc. ("B. Riley" or the "Company") (NASDAQ: RILY) and certain officers. The class action, filed in the United States District Court for the Central District of California, and docketed under 24-cv-02121, is on behalf of persons and entities that purchased or otherwise acquired B. Riley securities between February 28, 2022 and November 9, 2023, inclusive (the "Class Period"). Plaintiff pursues claims against the Defendants under the Securities Exchange Act of 1934 (the "Exchange Act").
If you are a shareholder who purchased or otherwise acquired B. Riley securities during the Class Period, you have until March 25, 2024 to ask the Court to appoint you as Lead Plaintiff for the class. A copy of the Complaint can be obtained at www.pomerantzlaw.com. To discuss this action, contact Danielle Peyton at [email protected] or 646-581-9980 (or 888.4-POMLAW), toll-free, Ext. 7980. Those who inquire by e-mail are encouraged to include their mailing address, telephone number, and the number of shares purchased.
[Click here for information about joining the class action]
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. Kahn is the Chief Executive Officer of Franchise Group, Inc. f/k/a Liberty Tax ("FRG"), which B. Riley has had dealings with since at least 2018. B. Riley has provided significant funds to FRG and/or one or more of its subsidiaries, and/or other entities controlled by Kahn, since at least December 2021. FRG is a holding company which acquires and manages companies, primarily franchises. FRG's businesses include Vitamin Shoppe, Pet Supplies Plus, and Buddy's Newco LLC (d/b/a Buddy's Home Furnishings) ("Buddy's"), among others.
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. ("Nomura") 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, throughout the Class Period, Defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the Company's business, operations, and prospects. Specifically, Defendants failed to disclose to investors that: (i) Defendants knew or were reckless in not knowing that Kahn and/or one or more of his controlled entities were engaged in illicit business activities; (ii) Kahn had been credibly implicated in a conspiracy to defraud investors of millions of dollars; (iii) in spite of all the foregoing, B. Riley continued to finance the transaction enabling Kahn and others to take FRG private through complex arrangements; (iv) the foregoing was reasonably likely to draw regulatory scrutiny to B. Riley; and (v) as a result of the foregoing, Defendants' positive statements about the Company's business, operations, and prospects were materially misleading and/or lacked a reasonable basis.
On November 2, 2023, Kahn was implicated as the 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. The same day, the SEC filed a civil complaint against Hughes in connection with these allegations, styled Securities and Exchange Commission v. John Hughes, No. 3:23-cv-21816 (D.N.J. filed November 2, 2023) (the "SEC Complaint"). The SEC Complaint, inter alia, implicated, among others, both Kahn and Buddy's in the alleged conspiracy to defraud investors. Bloomberg reported on that same day that Kahn had been identified by "a person familiar with the matter" as one of two co-conspirators.
On November 3, 2023, after the market closed, The Friendly Bear posted on the social media platform X (formerly known as Twitter), doubting whether B. Riley knew of Kahn's involvement and disclosed the same to Nomura. The Friendly Bear also commented that the DOJ's "charging document clearly implicates him [i.e., Kahn] in Hughes' crime. There is a high chance of indictment here."
On this news, B. Riley's stock price fell $9.02, or 22%, to close at $32.54 per share on the next trading day, November 6, 2023, on unusually heavy trading volume; and the price of B. Riley's 6.00% Senior Notes due 2028 ("6% Senior Notes") fell $1.77, or 9.01%, to close at $17.87 per 6% Senior Note 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 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, B. Riley's stock price fell $4.47, or 15%, to close at $25.60 per share on November 10, 2023, on unusually heavy trading volume; and B. Riley's 6% Senior Note price fell $1.01, or 5.34%, to close at $17.92 per 6% Senior Note on November 10, 2023. B. Riley's stock price continued to fall $3.59, or 14%, over the next consecutive trading session to close at $22.01 per share on November 13, 2023, on unusually heavy trading volume; and B. Riley's 6% Senior Note price fell $3.06, or 17.08%, over the next consecutive trading session to close at $14.86 per 6% Senior Note on November 13, 2023, on unusually heavy trading volume.
Pomerantz LLP, with offices in New York, Chicago, Los Angeles, London, Paris, and Tel Aviv, is acknowledged as one of the premier firms in the areas of corporate, securities, and antitrust class litigation. Founded by the late Abraham L. Pomerantz, known as the dean of the class action bar, Pomerantz pioneered the field of securities class actions. Today, more than 85 years later, Pomerantz continues in the tradition he established, fighting for the rights of the victims of securities fraud, breaches of fiduciary duty, and corporate misconduct. The Firm has recovered billions of dollars in damages awards on behalf of class members. See www.pomlaw.com.
Attorney advertising. Prior results do not guarantee similar outcomes.
CONTACT:
Danielle Peyton
Pomerantz LLP
[email protected]
646-581-9980 ext. 7980
SOURCE Pomerantz LLP
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