B. Riley Financial board issues statement regarding internal review

The Board of Directors of B. Riley Financial has provided the following statement regarding its review of the circumstances associated with the company’s participation in the management-led buyout of Franchise Group and related matters: “After B. Riley Financial learned from news reports in November 2023 that Brian Kahn was named as an unindicted co-conspirator in criminal charges against the former President and Chief Compliance Officer of Prophecy Asset Management, L.P., the Audit Committee of the B. Riley Financial Board of Directors retained outside counsel at Sullivan & Cromwell LLP to conduct a thorough, internal review of Mr. Kahn’s dealings with B. Riley. The Audit Committee, pursuant to its charter, provided Sullivan & Cromwell with a broad mandate to review any and all aspects of these matters. Over the last nine weeks, counsel – with the full cooperation and support from the Board and Company management – conducted its review of the facts and circumstances regarding Mr. Kahn’s relationship with the Company, including all prior transactions, loans and underlying collateral. The review confirmed what the Company previously disclosed: that the Company and its executives, including Bryant Riley, had no involvement with, or knowledge of, any of the alleged misconduct concerning Prophecy. Over the past year, persons acting to manipulate the price of the Company’s stock and to profit from that manipulation have sought to overwhelm the Company and its partners, advisors, employees and clients with baseless claims of alleged wrongdoing by B. Riley Financial, often accompanied by outrageous personal harassment. Their actions have far exceeded the acceptable limits of financial research and are an attempt to actively damage our business to justify their inaccurate claims. Their behavior is inexcusable, and their claims lack merit. Critically, B. Riley Financial does not owe – and never owed – any debt, of any nature, to Mr. Kahn on account of the resolution of the Rent-A-Center litigation. There was not a “client revenue sharing agreement” with Mr. Kahn, and the transactions with Mr. Kahn and his companies were on market terms. B. Riley Financial has a perfected first-lien security interest in the ownership interests in Freedom VCM Holdings, LLC (FRG’s post-transaction parent entity) currently collateralizing its loan with Vintage Capital, the certificates are in B. Riley Financial’s possession, and the Board remains confident in the long-term investment thesis for Freedom and FRG. Finally, the B. Riley Financial Board confirms its confidence in the integrity of the Company’s reporting with respect to these matters, reiterates that the Company acted properly and in the best interests of shareholders with regard to the FRG transaction in August 2023, and remains committed to protecting the interests of all shareholders.”