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Why B. Riley Financial Stock Soared Today

Motley Fool - Thu Mar 28, 5:50PM CDT

Shares of B. Riley Financial (NASDAQ: RILY) climbed 11.6% on Thursday after the financial services firm was granted an extension by lender Nomura to file its audited financial results.

Is this a sign B. Riley may finally soon file its audited 2023 financials?

In an SEC filing yesterday, B. Riley revealed that it has secured an extension from Nomura Corporate Funding Americas, giving it until April 29, 2024 to deliver its audited financials for the year ending Dec. 31, 2023 in order to remain in good standing with the lender.

"The Company acknowledges the key role its lenders and other counterparties have played in its growth and success and, as evidenced by the extension, continues to maintain an ongoing and productive dialogue with its lenders even through this temporary delay," B. Riley wrote in the filing.

B. Riley has come under fire from short sellers since November 2023 amid scrutiny over its relationship with Brian Kahn, an executive reportedly tied to a massive fraud investigation. The concerns specifically revolve around the company's $216.5 million investment in the $2.8 billion management-led buyout of Franchise Group, which owns a portfolio of businesses including The Vitamin Shoppe, Pet Supplies Plus, Badcock Home Furniture, and Sylvan Learning.

B. Riley subsequently launched an internal review of the firm's connections with Kahn -- affecting its ability to file audited 2023 financials on time in the process. The firm has repeatedly expressed confidence in the integrity of its financial reporting.

Earlier this month, B. Riley received a delinquency notification letter from Nasdaq due to its failure to file those results in a timely fashion, spurring concerns over a potential delisting of its stock. Investors also naturally grew worried over the possibility that B. Riley could face repercussions from its creditors and lending partners.

What's next for B. Riley investors?

This saga isn't finished yet, as this isn't an extension from Nasdaq of B. Riley's time to file. But this news does offer some relief that B. Riley doesn't need to worry about its creditors dropping the hammer due to the delayed financials. With shares down more than 65% from last summer's highs amid all this uncertainty, it's no surprise to see the stock partially rebounding in response today.

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Steve Symington has no position in any of the stocks mentioned. The Motley Fool recommends Nasdaq. The Motley Fool has a disclosure policy.

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