Bloomberg reported that U.S. authorities are looking into investment firm B. Riley’s dealings with Brian Kahn, who is accused of being a co-conspirator in a criminal case against the Department of Justice. The article cited persons who are acquainted with the subject.
In a statement, B. Riley stated that it was not aware of any investigation of this kind being conducted by the U.S. Securities and Exchange Commission (SEC), but in the event that an inquiry were to take place, it would provide full cooperation. The statement continued, “The report is repeating unfounded accusations that have been made publicly for months by short sellers determined to harm the Firm.”
B. Riley has recently made significant investments in the bitcoin mining industry. A $70 million loan from B. Riley Commercial Capital was approved in March 2023 by a federal judge supervising bitcoin miner Core Scientific’s (CORZ) Chapter 11 bankruptcy process. In September 2023, bitcoin miner Iris Energy (IREN) inked an agreement to sell up to $100 million in equity to B. Riley.
Brian Kahn’s identity is still unknown. But according to a person with knowledge of the situation quoted in the Bloomberg story, Kahn is the CEO of Franchise Group Inc. One of the two co-conspirators in the $294 million securities fraud against clients was the CEO of a multibillion dollar retail franchise company, according to John Hughes, co-founder of the hedge fund Prophecy Asset Management, who entered a guilty plea in November 2023 without naming Kahn.
The report claims that B. Riley has been Kahn’s “longstanding client,” and the bank assisted him in leading a “management buyout of Franchise Group, or FRG, a retail company based in Delaware, Ohio.” A big Japanese financial institution called Nomura had also “led a $600 million lending syndicate for B. Riley to help finance Kahn’s takeover,” according to loan documents cited in the study.
Numerous cryptocurrency-related companies, such as Komainu and Ledger, are supported by Nomura. The article added that Nomura is not the investigation’s primary target, and that it is still in its early phases.