--- title: "SEC subpoenas to BRC, Bryant Riley and employees, 2024–2026, and BRC’s reviews" language: en canonical: https://dossiertwist.com/dossiers/brc-group-holdings/sec-inquiry/ as_of: 2026-10-17 keywords: ["BRC Group Holdings","B. Riley Financial","Bryant Riley","Tom Kelleher","Brian Kahn","Franchise Group","Freedom VCM Holdings","Vintage Capital Management","Prophecy Asset Management","SEC subpoenas","securities class action","FRG Litigation Trust","Willkie Farr & Gallagher","B. Riley Securities","Babcock & Wilcox","Base Electron","Great American Holdings","GlassRatner","Oaktree credit agreement","asset sales"] --- # SEC subpoenas to BRC, Bryant Riley and employees, 2024–2026, and BRC’s reviews **Question.** What has the SEC asked BRC and Bryant Riley for, what did the company’s own reviews conclude, and where does the inquiry stand? **Answer.** In July and November 2024 the Securities and Exchange Commission sent document subpoenas to BRC, then B. Riley Financial, and to its Chairman and Co-Chief Executive Officer Bryant Riley, mainly about the company's dealings with Brian Kahn and Franchise Group and about Riley's personal loan and share pledge; in June 2026 it subpoenaed certain current and former employees for testimony. A subpoena is a request: the company states that receiving one does not mean the SEC has determined that any violation occurred, and that it and Riley are cooperating. BRC says its Audit Committee review and an independent investigation found that the company and its executives had no involvement with, or knowledge of, Kahn's alleged misconduct. No SEC finding, charge or closure concerning BRC or Riley appears in the records. ## The document subpoenas of 2024 and the testimony subpoenas of 2026 - Analysis: On July 3, 2024 BRC, then named B. Riley Financial, and its Chairman and Co-Chief Executive Officer Bryant Riley each received a subpoena from the Securities and Exchange Commission (SEC) requesting documents and information primarily about the company's business dealings with Brian Kahn, certain transactions in the securities of an unrelated public company, and the communications and related compliance policies of certain regulated subsidiaries. On November 22, 2024 each received an additional SEC subpoena seeking documents about Franchise Group, Inc., including its holding company Freedom VCM Holdings, LLC, and about Riley's personal loan and his pledge of company shares as collateral for it. The inquiry was continuing in 2026: BRC's quarterly report states that in June 2026 the SEC issued subpoenas to certain current and former employees seeking their testimony, which is the latest status the retained records show. A subpoena, whether for documents or for testimony, is a request made in a continuing inquiry. The company states that receiving the subpoenas is not an indication that the SEC or its staff has determined that any violation of law has occurred, and that both it and Riley are responding to them and fully cooperating with the SEC. No SEC finding, charge, enforcement action or closure concerning the company or Riley appears in the records reviewed for this dossier. [src-014] [src-002] ## What the company’s reviews found, and who commissioned them - Analysis: BRC's own account rests on two reviews. The company states that, as it disclosed on April 23, 2024, its Audit Committee conducted an internal review with the assistance of the company's legal counsel Sullivan & Cromwell LLP and separately retained Winston & Strawn LLP as independent counsel to investigate transactions between Brian Kahn and his affiliates and the company and its affiliates, and that both the review and the investigation confirmed that the company and its executives, including Bryant Riley, had no involvement with, or knowledge of, any alleged misconduct concerning Kahn or his affiliates. The review reports themselves are not in the retained records, so these conclusions are the company's own description of reviews its Audit Committee commissioned. Reciting the complaint in a stockholder derivative case, the Delaware Court of Chancery noted that Sullivan & Cromwell reported to the board on February 19, 2024 that it found no evidence of misconduct by B. Riley personnel or knowledge of the fraudulent activities at Prophecy “before the November 2023 take-private announcement”, in the court's words, and that director Randall E. Paulson reported in mid-March 2024 that Winston & Strawn's investigation was complete and “did not uncover a single badge of fraud” by B. Riley, findings disclosed in an April 2024 Form 8-K. The plaintiff in that case alleged that using the company's existing counsel ensured an exonerating result; plaintiffs in later derivative demands criticized the internal investigations, and the SEC inquiry was continuing in 2026. [src-014] [src-055] - Analysis: Two other records describe an earlier investigation and differ on who commissioned it. According to the amended complaint in the federal securities class action, as recited by the court in its December 12, 2025 order, days after John Hughes pleaded guilty on November 2, 2023 to conspiracy to commit securities fraud for his role in the Prophecy Asset Management fraud, B. Riley Financial formally retained the law firm Petrillo Klein & Boxer LLP to investigate whether any of its directors, officers or employees were involved in, or had knowledge of, Kahn's alleged misconduct. That is the class plaintiffs' account as summarized by the court for a motion to dismiss. Franchise Group's chief restructuring officer stated in a declaration dated November 4, 2024 that it was Franchise Group that retained Petrillo Klein & Boxer after learning of Kahn's alleged involvement, and that the investigation concluded that neither Franchise Group nor its directors, officers or employees other than Kahn had any involvement in or knowledge of his alleged misconduct. The company's own filings describe the later Audit Committee review with Sullivan & Cromwell and the independent investigation by Winston & Strawn. [src-062] [src-070] ## Press accounts of the inquiry in August 2024 - Analysis: In August 2024 a press report citing unnamed people familiar with the matter said the SEC was assessing whether B. Riley adequately disclosed the risks embedded in some of its assets, was seeking information on interactions between Bryant Riley and his longtime business partner Brian Kahn, and was reviewing possible improper trading by other insiders and the movement of receivables between companies, in civil probes running alongside a federal criminal inquiry in New Jersey into the collapse of the Prophecy Asset Management fund. The SEC had not announced any inquiry, and the same report stated that Kahn, Riley and their companies had not been charged with anything and that the probes could conclude with no action against any of them. On an investor call reported in that article, Riley said he and the company were responding to the July 2024 subpoenas and fully cooperating, and that they were confident the SEC would reach the same conclusion as the company's internal investigation: that they had no involvement with or knowledge of any alleged misconduct concerning Kahn or his affiliates. [src-108] - Analysis: Another account, published on August 21, 2024, reported that B. Riley's stock collapsed on August 12, 2024 on word that Riley and the company had received SEC subpoenas and that the company was headed for its worst quarterly loss, largely because of its investment in Kahn's business, and that U.S. authorities had widened their investigation of Kahn and his dealings with Riley and the firm. The account does not identify the authorities' sources or scope beyond the subpoenas the company itself disclosed, and those subpoenas are requests, not findings. [src-075] ## Other regulatory requests and the risk of further claims - Analysis: Separately from the subpoenas, the SEC's Division of Corporation Finance wrote to Chief Financial Officer Phillip J. Ahn on September 23, 2024 that it had completed its review of B. Riley Financial's Form 8-K filed April 8, 2024 (File No. 001-37503), reminding the company that it and its management are responsible for the accuracy and adequacy of their disclosures notwithstanding any review, comments, action or absence of action by the staff. A letter completing a filing review of this kind is routine staff correspondence; it is neither a finding of compliance nor of any violation. [src-057] - Analysis: At the brokerage level, the audited statement of financial condition of B. Riley Wealth Management, Inc. for 2024, filed with the SEC in April 2025, states that as of December 31, 2024 the broker-dealer was undergoing a cause examination by FINRA, its designated self-regulatory organization, and that no estimate could be made. A FINRA cause examination is a regulatory inquiry that may follow customer complaints or tips; its existence is not a finding of any violation, and no outcome appears in the retained records. In an emailed statement reported in April 2025, B. Riley said the filing referred to a routine FINRA request for additional information that B. Riley Wealth Management receives regularly, and that the firm had responded to and complied with the request. [src-076] [src-077] - Analysis: BRC's financial statements for 2025 and for the quarter ended June 30, 2026 add that, beyond pending claims and regulatory reviews, the company and its subsidiaries are subject to the risk of unasserted claims, including matters related to Brian Kahn and the company's investment in Freedom VCM, and that the company has not accrued for any such contingent liabilities, which could have a material adverse impact on its financial condition if realized. The company states that if such claims are made it believes it has valid defenses and that any such claim would be without merit. [src-014] [src-002] ## The SEC’s own lawsuit over the Prophecy fund - Analysis: The SEC's own lawsuit over the Prophecy fund is a separate proceeding. On September 29, 2025 the SEC sued Prophecy Asset Management, LP, its chief executive and chief investment officer Jeffrey Spotts, and Brian Kahn, described as Prophecy's largest sub-adviser, in the U.S. District Court for the District of New Jersey (No. 3:25-cv-16058), alleging a multi-year fraud that concealed hundreds of millions of dollars of losses from investors. These are allegations in an SEC civil complaint. The court docket records an order on the United States' motion to intervene on February 17, 2026 and the case as terminated on May 19, 2026; the retained records contain no ruling on the merits. [src-039] [src-064] ## Sources - [src-014] BRC Group Holdings, Inc. quarterly report on Form 10-Q for the period ended June 30, 2026, U.S. Securities and Exchange Commission (EDGAR), 2026 - [src-002] BRC Group Holdings, Inc. annual report on Form 10-K/A (Amendment No. 1) for the year ended December 31, 2025, U.S. Securities and Exchange Commission (EDGAR), 2026 - [src-055] Court of Chancery of the State of Delaware, memorandum opinion in the derivative action C.A. No. 2025-0164-LWW on behalf of B. Riley Financial, Inc., Court of Chancery of the State of Delaware, 2026-03-30 - [src-062] Court record source · src-062 - [src-070] Court record source · src-070 - [src-108] Media source · src-108 - [src-075] Media source · src-075 - [src-057] SEC Division of Corporation Finance letter to B. Riley Financial, Inc. on its Form 8-K filed April 8, 2024, U.S. Securities and Exchange Commission (EDGAR), 2024-09-23 - [src-076] Media source · src-076 - [src-077] B. Riley Wealth Management, Inc. audited statement of financial condition as of December 31, 2024 (Rule 17a-5 public filing), U.S. Securities and Exchange Commission (EDGAR), 2025-03 - [src-039] SEC Litigation Release No. 26414: SEC v. Prophecy Asset Management, LP, Jeffrey Spotts, and Brian Kahn, No. 3:25-cv-16058 (D.N.J.), U.S. Securities and Exchange Commission, 2025-09-29 - [src-064] Court record source · src-064