PANews , January 22, according to Bloomberg, U.S. authorities are investigating investment bank B. Riley Financial Inc.’s transactions with a key client related to securities fraud and the use of the client’s assets to help the investment bank. Loans obtained from Nomura Holdings Inc. The U.S. Securities and Exchange Commission (SEC) has conducted interviews in recent months regarding B. Riley and his relationship with Brian Kahn, people familiar with the matter said. Kahn is an unidentified co-conspirator in a U.S. Department of Justice criminal case stemming from the 2020 collapse of hedge fund Prophecy Asset Management. Officials have been investigating how Kahn led the acquisition of a retail business called Franchise Group Inc. in a deal arranged by B. Riley last year. Nomura partially funded the deal by using some of Kahn's assets as collateral, people familiar with the matter and documents reviewed by Bloomberg show. Concerns about B. Riley's relationship with Kahn caused B. Riley's stock price to plummet and some investments to suffer losses and writedowns, and the stock attracted a flood of bets from so-called short sellers betting it would fall further.
An SEC spokesman declined to comment, saying the investigation is in its early stages. The agency's review does not necessarily imply any wrongdoing by anyone or that legal action will be taken, and Nomura is not the focus of the investigation. A spokesperson for B. Riley said in an emailed statement: "We have not received any information from the SEC regarding this matter and will fully cooperate if the SEC conducts an investigation."
It is reported that B. Riley has recently made large investments in the field of Bitcoin mining. In September 2023, Bitcoin mining company Iris Energy (IREN) signed an agreement to sell up to $100 million in equity to B. Riley . In March 2023, the federal judge overseeing the Chapter 11 bankruptcy proceedings of Bitcoin miner Core Scientific (CORZ) approved a $70 million loan from B. Riley Commercial Capital to help the company get back on its feet.
