B. Riley slumps to 10-year low as take-private offer fails to stem sell-off
Corrects headline and first paragraph to remove reference to B.Riley shares falling to a decade low
Aug 19 (Reuters) -B. Riley Financial RILY.O shares slumped by nearly 17% on Monday following a turbulent week that was capped by co-founder and co-CEO Bryant Riley offering to buy the bank.
The Los Angeles, California-based lender's stock fell as low as $4.82, dropping to its lowest level since last Thursday. It was last down 6.4% at $5.47.
Riley made an unsolicited offer on Friday to take the bank private for $7 apiece, valuing it at $212 million. The stock ended up 16%.
But B.Riley's shares still finished the week down by a record 65.5% and hit a decade low after the bank warned of a second-quarter loss, adding to concerns over its investment in Vitamin Shoppe-owner Franchise Group, which has been under scrutiny.
B. Riley and its CEO received subpoenas from the U.S. Securities and Exchange Commission in July. The subpoenas were primarily related to the bank's dealings with Franchise's former CEO, Brian Kahn.
In November, Bloomberg News reported that Kahn was a co-conspirator in a securities fraud involving Prophecy Asset Management.
Kahn has denied the allegations made in the report, saying he never knew that Prophecy Asset was allegedly defrauding investors. Earlier this year, an external investigation as well as an internal review cleared B. Riley of any wrongdoing.
Reporting by Medha Singh in Bengaluru and Chibuike Oguh in New York; editing by Alan Barona and David Evans
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