Investment bank B. Riley's shares slip at end of a punishing week

(Reuters) - B. Riley Financial's battered shares are on track to fall for a seventh straight session on Friday, capping a punishing week marred by investor concerns over a series of losses and regulatory setbacks.

A steep 70% plunge in the stock has wiped $360 million in market value for the Los Angeles-based bank so far this week, underscoring the ongoing challenges it's facing, particularly concerning its investment in Franchise Group (NASDAQ:FRG ), the parent company of Vitamin Shoppe.

On Monday, shares tumbled 52% after B. Riley warned of a loss of between $435 million and $475 million for the quarter ended June, a significant drop from the profit of $44 million reported a year earlier.

The bank also delayed its quarterly report and warned of a markdown of $330 million to $370 million in the period related to its investment in FRG, a deal under scrutiny by both its shareholders and regulators.

This week marks the third time the bank has delayed its reports with the SEC this year.

If losses hold throughout the session, the stock would see its longest streak of declines since early 2022. About 78% of the free float is sold short, nearing the highest in at least five years, according to estimates from ORTEX Technologies.

In July, B. Riley and its CEO received subpoenas from the U.S. Securities and Exchange Commission, primarily related to the bank's dealings with Franchise's former CEO, Brian Kahn.

Bloomberg News reported in November 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. An external investigation and an internal review earlier this year cleared B. Riley of any wrongdoing.

The stock was last down about 10% before the bell at $4.52, trading near levels last seen a decade ago.

Source: Investing.com