B. Riley Financial Clears Air Amid Allegations, Stock Surges
From the desk of Jim Eccleston at Eccleston Law
Amidst swirling speculation regarding its connections with a client linked to the Prophecy Asset Management collapse, B. Riley Financial Inc. has conducted an internal review, concluding no affiliations with the defunct hedge fund.
Bloomberg reports that B. Riley reiterated its stance, affirming no involvement or awareness of any alleged misconduct concerning Prophecy. The board also expressed confidence in the company's integrity and its role in facilitating the management-led buyout of Brian Kahn's Franchise Group Inc.
Following this announcement, B. Riley's shares surged by more than 30 percent in New York trading, signaling a positive response from investors. The investment bank is pushing back against short sellers, who have raised concerns about its dealings with Kahn. Prosecutors have identified Kahn as an unindicted co-conspirator in a fraud case relating to Prophecy's collapse.
Despite these challenges, B. Riley emphasizes that its dealings with Kahn were conducted on market terms and maintains a secure first lien on Franchise Group-related assets. The firm has denounced the actions of short sellers, describing their allegations as lacking merit and extending beyond acceptable boundaries of financial research.
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