Shortseller, Marc Cohodes on RILY

Just the facts on $Rily . If you think 175 million $ to pay off a fraction of their bank debt to @nomura solves any issue for $Rily, guess again. The @SECGov is assessing several key risks in B. Riley’s assets:

1. Disclosure of Risks: The SEC is investigating whether B. Riley adequately disclosed the risks embedded in its assets, particularly those related to its investments and loans involving Brian Kahn and the Franchise Group (FRG).

2.Asset Valuation: There are concerns about the valuation of B. Riley’s loans and investments, which have been complicated by significant write-downs and financial losses.

3.Insider Trading and Receivables Movement: The SEC is also reviewing potential improper trading by insiders and the movement of receivables between companies, which could indicate financial mismanagement or concealment of liabilities.

The SEC’s investigation into B. Riley’s interactions with Brian Kahn focuses on several key areas:

1.Undisclosed Loans and Collateral: B. Riley allegedly made multiple loans to Kahn and entities he controlled, using collateral that may have been double-pledged, which contradicts the company’s statements.

2.Buyout of Franchise Group: The investigation scrutinizes B. Riley’s role in facilitating Kahn’s buyout of Franchise Group Inc., with concerns about the transparency and disclosure of financial risks involved.

3.Potential Fraud and Mismanagement: The SEC is assessing whether B. Riley adequately disclosed risks and whether there was any improper trading or financial mismanagement linked to its dealings with Kahn.