LOST MONEY IN GWG L BONDS? CLICK HERE TO LEARN MORE

B. Riley’s Recommendation of Franchise Group, Inc. (FRG): KlaymanToskes Investigates Investor Losses

If you have lost money in the stock market due to fraud, misrepresentation, negligence, or for other reasons, we can help you. We have successfully recovered over $250 million in FINRA securities arbitrations.*

Need Legal Help? Contact Us. Call +1 (888) 997-9956
Updated on: January 9, 2025

Have You Suffered Investment Losses in Franchise Group, Inc.? Contact KlaymanToskes

National investment loss lawyers KlaymanToskes is investigating allegations of misconduct related to B. Riley Financial’s recommendation that investors purchase shares of Franchise Group, Inc. (NASDAQ: FRG) as late as 2023. Franchise Group’s Chapter 11 bankruptcy filing in Delaware has resulted in significant losses for investors, raising concerns about the suitability of B. Riley’s investment recommendations and their due diligence practices.

Franchise Group’s Bankruptcy and B. Riley’s Role

Upon Franchise Group’s bankruptcy announcement, B. Riley Chairman Bryant Riley reportedly issued a statement to employees, stating that he felt “personally sick” about the outcome. The bankruptcy filing, which included a proposed plan for lenders to take over operations of some Franchise Group businesses such as Vitamin Shoppe, also left other assets, including American Freight, in the process of liquidation.

Franchise Group’s Chapter 11 bankruptcy filing followed prior announcements of write-downs totaling as much as $370 million and shareholder losses of $120 million for B. Riley. Franchise Group, which became a key holding of B. Riley after the firm assisted in arranging a $2.8 billion buyout, saw its shares plunge in value, contributing to a 12% drop in B. Riley’s stock price. Further complicating the matter, Brian Kahn, the co-founder and former CEO of B. Riley, is under federal investigation for his alleged involvement with the now-defunct Prophecy Asset Management hedge fund, a scandal that has heightened investor concerns.

Did B. Riley Violate Securities Rules with Franchise Group Recommendations?

KlaymanToskes is investigating whether B. Riley Financial’s recommendation of Franchise Group, Inc. (FRG) stock violated securities rules and industry standards, including:

  • Failure to Conduct Adequate Due Diligence: Whether B. Riley performed proper due diligence on Franchise Group’s financial condition, operations, and long-term viability before recommending the investment to clients.
  • Unsuitable Investment Recommendations: Whether B. Riley’s recommendations to purchase FRG stock aligned with investors’ individual risk tolerances, financial objectives, and investment profiles.
  • Conflict of Interest: As a significant shareholder and key stakeholder in Franchise Group, B. Riley’s dual role raises questions about whether conflicts of interest influenced its recommendations to clients.
  • Lack of Transparency and Risk Disclosure: Whether investors were adequately informed of Franchise Group’s financial challenges, including write-downs and potential bankruptcy risks.

What Can Franchise Group, Inc. (FRG) Investors Do?

If you suffered significant losses due to B. Riley’s recommendation to invest in Franchise Group, Inc., you may be entitled to recover your losses. KlaymanToskes is dedicated to helping investors hold brokerage firms accountable for unsuitable recommendations, failure to disclose material risks, and other misconduct. Contact us at 888-997-9956 or investigations@klaymantoskes.com for a free and confidential consultation to discuss your potential recovery options.