Core Points - B. Riley Financial is facing significant challenges due to a scandal involving hedge fund investor Brian Kahn, who has been charged with criminal fraud [1][2] - Kahn's management buyout of Franchise Group, financed partly by $600 million in B. Riley debt, has been linked to substantial investor losses and the collapse of Prophecy Asset Management [2][4] - The Franchise Group filed for bankruptcy in November 2024, exacerbating B. Riley's financial troubles [6] Group 1 - Brian Kahn, who led a failed management buyout, has been charged with conspiracy to commit securities fraud, resulting in over $350 million in investor losses [2][4] - The criminal indictment against Kahn was linked to the collapse of Prophecy Asset Management, which had previously lost significant investor funds [3][4] - B. Riley Financial provided $600 million in debt for the management buyout and took a 31% stake in Franchise Group, which included brands like Vitamin Shoppe [5][6] Group 2 - The fallout from the hedge fund scandal and declining sales led to the bankruptcy of Franchise Group, impacting B. Riley's financial standing [6] - B. Riley has received SEC subpoenas regarding its dealings with Kahn and Franchise Group, indicating ongoing regulatory scrutiny [6]