B. Riley and Nomura Under SEC Scrutiny: Bloomberg's Crypto Report

• B. Riley Faces Possible Investigation Linked to Alleged Co-Conspirator
• B. Riley Responds to Allegations
• B. Riley's Investments in Bitcoin Mining
• The Mystery of Brian Kahn
• B. Riley and Kahn's Relationship
• Nomura's Position in the Case

B. Riley Faces Possible Investigation Linked to Alleged Co-Conspirator

The investment bank B. Riley may be under investigation from U.S. authorities regarding its dealings with Brian Kahn, who is alleged to be a co-conspirator in a criminal case brought by the U.S. Department of Justice. This information comes from a Bloomberg report that cites individuals who are privy to the matter.

B. Riley Responds to Allegations

In response to the report, B. Riley declared that it has no knowledge of any such investigation by the U.S. Securities and Exchange Commission (SEC). However, the firm added that it stands ready to fully cooperate should an investigation arise. The firm dismissed the report as echoing baseless allegations that have been publicly made for months by short sellers with the intent to damage the firm.

B. Riley's Investments in Bitcoin Mining

In recent times, B. Riley has made significant investments in the bitcoin mining industry. In September 2023, Iris Energy, a bitcoin miner, signed a deal to sell equity worth up to $100 million to B. Riley. Furthermore, in March 2023, a federal judge overseeing the Chapter 11 bankruptcy process of bitcoin miner Core Scientific approved a $70 million loan from B. Riley Commercial Capital to assist the company in recovering.

The Mystery of Brian Kahn

The identity of Brian Kahn remains uncertain. However, a person familiar with the matter, cited in the Bloomberg report, stated that Kahn is the CEO of Franchise Group Inc. In November 2023, John Hughes, a co-founder of hedge fund Prophecy Asset Management, pleaded guilty to securities fraud amounting to $294 million against clients. Hughes admitted that one of the co-conspirators was the CEO of a multibillion-dollar retail franchise company, though he did not officially name Kahn.

B. Riley and Kahn's Relationship

According to the report, Kahn has been a longstanding client of B. Riley. The bank has previously assisted him in leading a management buyout of Franchise Group, a retail company based in Delaware, Ohio. Additionally, the report, citing loan documents, revealed that Nomura, a significant Japanese financial group, had led a $600 million lending syndicate for B. Riley to help finance Kahn's takeover.

Nomura's Position in the Case

Nomura, which backs several crypto-related entities, such as Komainu and Ledger, is not the focus of the investigation, which is still in its early stages. Both the SEC and Nomura have not yet responded to requests for comments on the matter.

Edited by Jonathan Stoker