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05/10/2023 - 11/09/2023


Complaint 01/24/24



The litigation focuses on B. Riley’s assistance to its client, Brian Kahn, the then-CEO of Franchise Group, Inc. (“FRG”), in the $2.8 billion management-led buyout of FRG. The deal closed on Aug. 21, 2023 and B. Riley reportedly invested $216.5 million in an equity financing to facilitate it.

The complaint alleges B. Riley misrepresented and failed to disclose to investors: (1) that Brian Kahn had been credibly implicated in a conspiracy to defraud investors of millions of dollars; (2) that, despite this involvement, B. Riley continued to finance the transaction enabling Kahn and others to take FRG private through complex arrangements; and (3) the foregoing was reasonably likely to draw regulatory scrutiny to B. Riley.

Investors began to learn the truth on Nov. 2, 2023, when Bloomberg reported that Kahn had been identified as “Co-conspirator-2” in a conspiracy to defraud investors of $294 million that the DOJ was prosecuting.

Then, on Nov. 9, 2023, B. Riley revealed significant details about the FRG transaction and the years-long series of complex financial transactions among B. Riley, Kahn, and their company’s respective subsidiaries culminating in the Aug. 21, 2023 FRG transaction.

These events sent the price of B. Riley shares sharply lower.

More recently, on Jan. 20, 2024, FRG abruptly replaced Kahn as its CEO.

Finally, on Jan. 21, 2024, Reuters reported that “U.S. authorities are investigating B. Riley’s deals with a client who was linked to a securities fraud, and the use of his assets to help the investment bank obtain a loan from Nomura Holdings[.]” The report also said, “[t]he SEC has carried out interviews in recent months about B. Riley and its relationship with Brian Kahn[,]” and “SEC officials have been scrutinizing how Kahn led a buyout of Vitamin Shoppe owner Franchise Group last year in a deal arranged by B. Riley[.]” Reuters added that “Nomura partly financed the transaction, with some of Kahn’s assets pledged as collateral.”



What is the RILY securities class-action case about?

The litigation focuses on B. Riley’s assistance to its client, Brian Kahn, the then-CEO of Franchise Group, Inc. (“FRG”), in the $2.8 billion management-led buyout of FRG. The deal closed on Aug. 21, 2023 and B. Riley reportedly invested $216.5 million in an equity financing to facilitate it.


I worked at RILY. What should I do?

If you were an employee of RILY during the period relevant to the class-action case, you may have valuable information that could be relevant to the lawsuit. Hagens Berman is one of the nation’s top whistleblower law firms, and has successfully represented many individuals who come forward with information regarding corporate malfeasance. Under the new SEC Whistleblower program, whistleblowers who provide original information may receive rewards totaling up to 30 percent of any successful recovery made by the SEC. For more information, contact Reed Kathrein at 844-916-0895 or RILY@hbsslaw.com.

There are multiple law firms participating, do I need to contact all of them?

No, you do not need to contact all participating law firms. Generally, class-action lawsuits are consolidated into a single case to streamline the legal process, and attorneys from only a few law firms are selected to serve in a leadership role on the consolidated case. Hagens Berman has a proven track record of being appointed to leadership roles in complex, multidistrict litigation regarding investor fraud and other consumer rights issues, and your claim will be handled by attorneys who have helped secure approximately $325 billion in class-action settlements on behalf of individuals who have suffered due to corporate malfeasance and the wrongdoing of other powerful institutions


What is the threshold amount to be eligible? What are “substantial” losses?

The threshold amount and the definition of "substantial" losses may vary depending on a number of factors specific to the case, including the size of the company, market cap, shares outstanding and who holds them and the damages alleged by the fraud. In general, to be eligible to participate in a class-action lawsuit, you must be able to demonstrate that you suffered financial losses as a result of the alleged wrongdoing and that your losses meet the criteria set by the court or law firm. Fill out the form and submit your losses.


Am I affected? What do I need to do to participate?

If you were an investor in RILY during the relevant period specified in the class-action lawsuit, you may be affected and eligible to participate in the case. To determine your eligibility and potential involvement, fill out the form and submit your losses.

Can any RILY investor participate?

In most class-action cases, any investor who meets the eligibility criteria, including purchasing the shares during the relevant period, can participate, regardless of the size of their investment. Fill out the form to find out your rights.

I bought on a non-U.S. Exchange. Can I participate?

No. This class-action only covers shares bought on a U.S. exchange, i.e. NASDAQ or NYSE. Fill out the form to find out your rights.

Am I included if I still hold my shares, or do I need to sell to participate?

Participation is based on purchasing shares during the relevant period, rather than your current holdings. Accordingly, you do not need to sell to participate. Fill out the form to find out your rights.

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