B. Riley Financial, Inc. is currently under investigation by the Financial Industry Regulatory Authority (FINRA) for possible violations of securities laws tied to its wealth management practices. This development follows a wave of customer complaints and regulatory tips and comes amid growing legal and financial instability at the firm. For investors who may have been exposed to risky or misleading investment recommendations, this investigation raises serious concerns about how B. Riley managed its fiduciary responsibilities—and whether clients were misled in the process.
If you’ve suffered losses linked to B. Riley or were involved in transactions related to Franchise Group Inc. (FRG), don’t hesitate to reach out to Meyer Wilson Werning today. Our attorneys are experienced in securities fraud cases involving brokerage firms and will help to guide you through the process with a free consultation to determine whether your losses are the result of actionable misconduct.
What Triggered the FINRA Investigation Into B. Riley
The FINRA investigation began as a cause exam—a type of review that follows red flags like investor complaints, regulatory alerts, or internal misconduct. While B. Riley has disclosed the investigation in regulatory filings and says it is cooperating with all requests for information, the nature of the scrutiny suggests significant concerns.
Key aspects of the investigation include:
- Allegations of misrepresentation and potential fraud in connection with B. Riley’s investment practices
- A pending arbitration case involving seven investors, centered on the firm’s role in the now-bankrupt Franchise Group Inc. (FRG) buyout
- SEC subpoenas related to B. Riley’s dealings with FRG, which included companies like Vitamin Shoppe
- A significant delay in filing audited 2024 financial results, raising alarms among investors and regulators
The firm has maintained that it has done nothing wrong, but the volume and severity of legal inquiries paint a troubling picture for current and former clients.
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Impact on Investors and Ongoing Legal Challenges
It is likely that B. Riley’s financial and legal troubles have already taken a toll on its reputation, stock performance, and transparency—key indicators of a firm’s ability to safeguard client assets and communicate honestly.
Here’s how the situation has affected investors:
- B. Riley’s stock has declined over 90% in the past year, eroding shareholder value
- A class action lawsuit alleges that B. Riley misled investors about its financial condition and practices
- An investor arbitration claim alleges fraudulent inducement related to FRG transactions
- The firm has reported three consecutive years of losses, adding to concerns about its financial stability
- Short sellers and regulators have intensified their scrutiny, signaling broader market doubts
This pattern of legal trouble and financial decline suggests more than just market volatility—it raises serious questions about whether clients were given appropriate investment advice or if conflicts of interest played a role in their losses.
Understanding the Broader Financial Risks
The fallout from the investigation extends beyond potential fines. For investors still holding positions tied to B. Riley, the firm’s failure to file timely financial statements, coupled with multiple investigations, may indicate deeper internal issues that could affect recovery efforts and long-term value.
Potential consequences include:
- Regulatory sanctions or fines if violations are confirmed
- Weakened investor confidence, making it harder for the firm to stabilize or raise capital
- Delayed financial reporting, which hampers transparency and investor decision-making
- Reputational damage, possibly affecting client relationships and future business operations
If you’ve suffered losses connected to B. Riley’s investment recommendations, you may have been impacted by poor risk management or misleading representations. You are not to blame for relying on your financial firm’s guidance—the responsibility lies with the advisor or brokerage firm that failed to uphold their duty.
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What You Can Do if You’ve Been Affected
It’s important to recognize that you may have legal options, especially if you were steered into unsuitable investments or not fully informed about the risks associated with your portfolio. B. Riley’s disclosures and the investigations that followed suggest that some clients may have been placed in investments misaligned with their goals or risk tolerance.
Our team helps investors:
- Review portfolio histories for signs of negligence or misconduct
- File claims or participate in arbitration to pursue compensation
- Navigate class action involvement or individual legal recovery strategies
If you or someone you know has been a victim of losses through B. Riley, contact our team at Meyer Wilson Werning today. With over 20 years of experience and $350 million in recovered losses for our clients, we are well-versed in handling cases such as these.
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Frequently Asked Questions
What is the focus of the FINRA investigation?
The investigation centers on B. Riley’s wealth management practices, with concerns related to misrepresentation, unsuitable investment recommendations, and its role in the FRG transaction.
How has B. Riley’s stock performance been affected?
B. Riley’s stock has fallen over 90% in the past year amid legal and financial instability. This sharp decline may be linked to investor concerns about transparency, internal controls, and the potential for future sanctions.
What are the legal challenges B. Riley faces?
In addition to the FINRA investigation, B. Riley faces a class action lawsuit, an arbitration case involving multiple investors, and subpoenas from the SEC related to its FRG transactions.
Could the investigation result in fines or penalties?
Yes. If regulators determine that B. Riley violated securities laws, the firm could face sanctions, fines, and possibly restitution orders for harmed investors.
What should investors do now?
Investors should monitor the investigation closely, review their accounts for any unusual losses or risky investments, and consider speaking with a securities fraud attorney about their legal rights.
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