(Bloomberg) — Brian Kahn is stepping down as chief government officer of Franchise Group Inc., simply months after a leveraged buyout aided by B. Riley Monetary Inc., as regulators look into his ties to a defunct hedge fund.
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Andy Laurence, FRG’s present government vp, replaces Kahn instantly, in line with an individual aware of the matter, who requested to not be recognized as a result of the choice hasn’t been publicly introduced. FRG held a name with lenders to tell them of the change, the particular person mentioned.
Kahn’s exit has been within the works for a while, the particular person mentioned, earlier than a report this weekend by Bloomberg that the Securities and Trade Fee was wanting into a few of Kahn’s enterprise offers with B. Riley. Kahn has constantly denied wrongdoing and hasn’t been charged with something. His lawyer mentioned in an emailed assertion there’s no connection between Kahn’s resignation and any impending motion by regulators.
The boutique funding financial institution, catering to smaller publicly traded corporations, helped Kahn finance his buyout of FRG final yr, and it holds a stake within the firm, which owns retail manufacturers corresponding to Vitamin Shoppe and Sylvan Studying.
No Connection
Bloomberg reported in November that Kahn was regarded by prosecutors as a co-conspirator in a securities fraud case tied to the collapse of Prophecy Asset Administration.
Learn Extra: SEC Probes B. Riley Offers With Shopper Tied to Failed Fund
“As beforehand acknowledged, Mr. Kahn categorically denies any data of wrongdoing perpetrated by the managers of Prophecy, an entity that he stopped coping with a number of years in the past and which defrauded Mr. Kahn out of tens of tens of millions of {dollars},” Douglas Brooks, an lawyer for Kahn, mentioned within the emailed assertion. “Neither B. Riley nor Franchise Group had any dealings with Prophecy and any suggestion in any other case is patently false.”
The administration change will “enable FRG to execute on its longstanding strategic plan and free it from distraction,” Brooks mentioned, including that Kahn will stay as a advisor to FRG on strategic and merger-and-acquisition issues. “Any suggestion that Mr. Kahn’s resignation is linked to imminent motion by the regulators is fake, defamatory and is additional proof of the lies that quick sellers proceed to hawk to revenue from their misstatements.”
Shares of B. Riley fell 4.5% in prolonged buying and selling at 6:31 p.m. in New York. The corporate declined to touch upon Kahn’s departure. B. Riley mentioned in an announcement this weekend it wasn’t conscious of an SEC probe however would cooperate with any regulatory inquiry.
“We might welcome an investigation into the outrageous ways the quick sellers have pursued to destroy B. Riley, together with the coordinated choices buying and selling with zero disclosure obligations,” B. Riley mentioned in its assertion. “The quick sellers proceed to harass, intimidate, and insult workers and everybody related to B. Riley, resorting to lies and crude remarks to allow them to personally revenue.”
(Updates with remark from Kahn’s lawyer beginning within the sixth paragraph.)
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