B. Riley shares extend slump as investors fret over loss warning, regulatory woes

(Reuters) – B. Riley Financial shares slumped for the sixth straight session on Thursday to hit their lowest in a decade on lingering worries over a second-quarter loss and regulatory scrutiny. 

The stock has been hammered this week after the Los Angeles-based investment bank also delayed filing its regulatory reports.

On Monday, shares tumbled 52% after B. Riley warned of a loss of between $435 million and $475 million for the three months ended June. That compared with a profit of $44 million, a year earlier.

The bank also warned it could report a markdown of $330 million to $370 million in the quarter related to its investment in Vitamin Shoppe-parent Franchise Group (NASDAQ:). The deal had attracted scrutiny from shareholders and regulators.

This was the third time the bank delayed its reports with the Securities and Exchange Commission (SEC) this year. B. Riley said the holdup was due to delays tied to finalizing the valuations of certain loans and investments.

The stock, down more than 70% so far this year, was among the top 10 losers in the index on Thursday. The rout has wiped out nearly $335 million of the bank’s market value so far this week.

In July, B. Riley and its CEO received subpoenas from the SEC, primarily related to the bank’s dealings with Franchise’s former CEO, Brian Kahn.

Bloomberg News reported in November that Kahn was a co-conspirator in a securities fraud involving Prophecy Asset Management.

Kahn has denied the allegations made in the report, saying he never knew that Prophecy Asset was allegedly defrauding investors.

An external investigation and an internal review earlier this year cleared B. Riley of any wrongdoing.

The company’s shares, halted multiple times for volatility, were last trading down 21%.