U.S. authorities are investigating B. Riley Financial Inc.’s deals with a key 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 Inc., Bloomberg News reported. The U.S. Securities & Exchange Commission carried out interviews in recent months about B. Riley and its relationship with Brian Kahn, the people said, requesting anonymity as details aren’t public. Kahn is an unidentified co-conspirator in a Department of Justice criminal case prompted by the 2020 demise of the Prophecy Asset Management hedge fund, Bloomberg News previously reported. Officials have been scrutinizing how Kahn led a buyout of a retail business called Franchise Group Inc. in a deal arranged last year by B. Riley. Nomura partly financed the transaction, with some of Kahn’s assets pledged as collateral, according to the people and documents reviewed by Bloomberg.
