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(Reuters) – U.S. authorities are investigating B. Riley Financial’s dealings with a client involved in 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 and Exchange Commission (SEC) has questioned B. Reilly about his relationship with Brian Kahn in recent months, according to a report Sunday, citing people familiar with the matter.
Bloomberg earlier reported that Khan was one of two co-conspirators named by John Hughes, co-founder of hedge fund Prophecy Asset Management, who pleaded guilty to securities fraud last year. be.
Khan previously said in a statement to Reuters: “During my previous business relationship with Prophecy, I had no knowledge that Prophecy or its principals were allegedly defrauding investors, nor was I complicit in the fraud. ” he said.
SEC officials are scrutinizing how Khan led the acquisition of Vitamin Shoppe owner Franchise Group last year in a deal orchestrated by B. Reilly, Bloomberg reported. It is said that there is. Nomura partially funded the deal by pledging some of Khan’s assets as collateral, it added.
B. Riley and the SEC did not immediately respond to Reuters’ requests for comment on this report.
B. Riley shares plunge after the company reported lower revenue and a net loss in the third quarter and was forced to reduce its investment in a $2.6 billion go-private deal involving a franchise group. did.
(Reporting by Akanksha Khushi in Bengaluru; Editing by Rashmi Aichi)
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