Investment bank B. Riley is under investigation by U.S. authorities for its dealings with Brian Kahn, a co-conspirator in a U.S. Justice Department criminal case, people familiar with the matter said.
According to Bloomberg, B. Riley issued a statement saying that it had not received notification of an investigation by the US SEC, but if the SEC was indeed conducting an investigation, the company would fully cooperate.
Recently, B. Riley has made significant investments in the Bitcoin mining space. In September 2023, Bitcoin mining company Iris Energy signed an agreement with B. Riley to sell up to US$100 million in equity to B. Riley. In March 2023, the federal judge overseeing Core Scientific's bankruptcy reorganization process approved B. Riley Commercial Capital's $70 million loan to the company.
Brian Kahn is CEO of Franchise Group Inc., according to people familiar with the matter. In November 2023, John Hughes, co-founder of hedge fund Prophecy Asset Management, pleaded guilty to committing $294 million in securities fraud against clients and admitted that one of two conspirators was the chief executive of a multibillion-dollar retail franchise. officer, although Brian Kahn was not officially identified by name.
Brian Kahn is said to have been a "long-time client" of B. Riley, and the bank helped Kahn lead "a management buyout of Franchise Group (FRG), a retail company headquartered in Delaware, Ohio." In addition, Bloomberg reported citing loan documents that Nomura, a large Japanese financial group, had "led a $600 million loan to B. Riley to help Brian acquire the company."
Nomura has invested in several crypto-related entities, including Komainu and Ledger. The Bloomberg report pointed out that Nomura is not the focus of the investigation and that the investigation is still in its early stages. (CoinDesk)
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