Audit Committee's Review Affirms the Company
Acted Properly with Regard to the Management-Led Buyout of
FRG;
B. Riley Financial and its Executives Had No
Involvement with, or Knowledge of, Alleged Prophecy
Misconduct
LOS
ANGELES, Feb. 22, 2024 /PRNewswire/ -- The Board of
Directors of B. Riley Financial, Inc. (Nasdaq: RILY) has provided
the following statement regarding its review of the circumstances
associated with the Company's participation in the management-led
buyout of Franchise Group ("FRG") and related matters:
After B. Riley Financial learned from news reports in
November 2023 that Brian Kahn was named as an unindicted
co-conspirator in criminal charges against the former President and
Chief Compliance Officer of Prophecy Asset Management, L.P., the
Audit Committee of the B. Riley Financial Board of Directors
retained outside counsel at Sullivan & Cromwell LLP to conduct
a thorough, internal review of Mr. Kahn's dealings with B. Riley.
The Audit Committee, pursuant to its charter, provided Sullivan
& Cromwell with a broad mandate to review any and all aspects
of these matters.
Over the last nine weeks, counsel – with the full cooperation
and support from the Board and Company management – conducted its
review of the facts and circumstances regarding Mr. Kahn's
relationship with the Company, including all prior transactions,
loans and underlying collateral. The review confirmed what the
Company previously disclosed: that the Company and its executives,
including Bryant Riley, had no
involvement with, or knowledge of, any of the alleged
misconduct concerning Prophecy.
Over the past year, persons acting to manipulate the price of
the Company's stock and to profit from that manipulation have
sought to overwhelm the Company and its partners, advisors,
employees and clients with baseless claims of alleged
wrongdoing by B. Riley Financial, often accompanied by outrageous
personal harassment. Their actions have far exceeded the acceptable
limits of financial research and are an attempt to actively damage
our business to justify their inaccurate claims. Their behavior is
inexcusable, and their claims lack merit. Critically, B. Riley
Financial does not owe - and never owed - any debt, of any nature,
to Mr. Kahn on account of the resolution of the Rent-A-Center
litigation. There was not a "client revenue sharing agreement" with
Mr. Kahn, and the transactions with Mr. Kahn and his companies were
on market terms. B. Riley Financial has a perfected first-lien
security interest in the ownership interests in Freedom VCM
Holdings, LLC (FRG's post-transaction parent entity) currently
collateralizing its loan with Vintage Capital, the certificates are
in B. Riley Financial's possession, and the Board remains confident
in the long-term investment thesis for Freedom and FRG.
Finally, the B. Riley Financial Board confirms its confidence in
the integrity of the Company's reporting with respect to these
matters, reiterates that the Company acted properly and in the best
interests of shareholders with regard to the FRG transaction in
August 2023, and remains committed to
protecting the interests of all shareholders.
About B. Riley Financial
B. Riley Financial is a
diversified financial services platform that delivers tailored
solutions to meet the strategic, operational, and capital needs of
its clients and partners. B. Riley leverages cross-platform
expertise to provide clients with full service, collaborative
solutions at every stage of the business life cycle. Through its
affiliated subsidiaries, B. Riley provides end-to-end financial
services across investment banking, institutional brokerage,
private wealth and investment management, financial consulting,
corporate restructuring, operations management, risk and
compliance, due diligence, forensic accounting, litigation support,
appraisal and valuation, auction, and liquidation services. B.
Riley opportunistically invests to benefit its shareholders, and
certain affiliates originate and underwrite senior secured loans
for asset-rich companies. B. Riley refers to B. Riley Financial,
Inc. and/or one or more of its subsidiaries or affiliates. For more
information, please visit www.brileyfin.com.
Forward-Looking Statements
Statements made in this
press release that are not descriptions of historical facts are
forward-looking statements that are based on management's current
expectations and assumptions and are subject to risks and
uncertainties. If such risks or uncertainties materialize or such
assumptions prove incorrect, our business, operating results,
financial condition, and stock price could be materially negatively
affected. You should not place undue reliance on such
forward-looking statements, which are based on the information
currently available to us and speak only as of today's date. Such
forward-looking statements include, but are not limited to,
statements regarding our confidence in the long-term investment
thesis for Freedom and FRG. Factors that could cause such actual
results to differ materially from those contemplated or implied by
such forward-looking statements include, without limitation, the
risks described from time to time in B. Riley Financial, Inc.'s
periodic filings with the SEC, including, without limitation, the
risks described in B. Riley Financial, Inc.'s Annual Report on Form
10-K for the year ended December 31,
2022 and in our Quarterly Report on Form 10-Q for the
quarters ended March 31, 2023;
June 30, 2023, and September 30, 2023 under the captions "Risk
Factors" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" (as applicable). Additional
information will be set forth in B. Riley Financial, Inc.'s Annual
Report on Form 10-K for the year ended December 31, 2023. These factors should be
considered carefully, and you are cautioned not to place undue
reliance on such forward-looking statements. All information is
current as of today's date, and B. Riley Financial undertakes no
duty to update this information.
Contacts
|
|
Investors
|
Media
|
Mike Frank
|
Jo Anne
McCusker
|
ir@brileyfin.com
|
jmccusker@brileyfin.com
|
(212)
409-2424
|
(646)
885-5425
|
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SOURCE B. Riley Financial