$RILY Faces Legal Challenges Amid Security Fraud Admissions, 20 to 1 Leverage, and $1.70 per Share Loss

$RILY is facing significant legal challenges and accusations of security fraud. The company has admitted to security fraud related to the sale of private shares of $FRG, with allegations that Kahn was a related party throughout 2023, which was not disclosed to buyers. This has led to calls for investors to sue for fraud. Additionally, $RILY's broker-dealer business saw a 50% decline in Q1, and the company reported a loss of $1.70 per share. Great American, a subsidiary, generated $6 million in revenue in Q1, but its valuation is under scrutiny. The company's leverage, reportedly 20 to 1, and debt situation, including concerns about paying off Nomura debt and Baby Bonds, are also under question. $RILY owns 200 million plus of paper junior to the assets in question. Furthermore, the independent 3rd party valuation firm is no longer sponsoring, and the secondary shares were sold at $55 last summer.