"B. Riley Financial Under SEC Probe Over Client's Failed Hedge Fund Links"
The Securities and Exchange Commission is reportedly investigating B. Riley's dealings with a client linked to alleged securities fraud and the use of his assets to secure a loan from Nomura Holdings, causing B. Riley's shares to plummet 13% in premarket trading. The client, Brian Kahn, is an unidentified co-conspirator in a Justice Department criminal case related to the 2020 collapse of the Prophecy Asset Management hedge fund. The SEC's inquiries include evaluating Kahn's involvement in a buyout of Franchise Group Inc. arranged by B. Riley last year. B. Riley's shares have dropped 42% since November amid fraud allegations and connections to Kahn, and the firm was also the subject of short-seller reports.