More Problems at B. Riley (RILY)

Two weeks ago, The Bear Cave published on problems at both B. Riley (NASDAQ: RILY — $585 million) and Applied Digital (NASDAQ: APLD — $576 million) and highlighted B. Riley’s ties and large financial exposure to accused fraudster Brian Kahn, as well as other regulatory and disclosure issues at the company.

Last week, The Bear Cave hosted a recorded interview with prolific short seller Marc Cohodes, who called B. Riley the “biggest pound-for-pound financial fraud I’ve seen.”

Three days ago, the Wall Street Journal reported on further ties between B. Riley and accused fraudster Brian Kahn and wrote that B. Riley “made at least 10 different loans to Kahn and entities he controlled from 2018 through 2023.”

Today’s investigation from The Bear Cave presents new evidence on three major fronts:

First, The Bear Cave believes that B. Riley’s audit engagement partner at Marcum, Mr. James LaRocca, may have departed the firm in recent days — just two weeks before B. Riley is required to file its audited 10-K.

Second, The Bear Cave has found additional public documentation to suggest that collateral underpinning B. Riley’s $201 million loan to Brian Kahn is double pledged — in contradiction to B. Riley’s recent statements to the Wall Street Journal.

Third, The Bear Cave has learned that Marcum, B. Riley’s auditor, has engaged outside counsel to “represent Marcum in connection with regulatory matters” in response to numerous concerns about B. Riley.

Let’s dig in.