B. Riley Wealth Management

B. Riley Wealth Management (CRD #: 2543) opened in 2017, when its parent company, B. Riley Financial, purchased an independent broker called Wunderlich Securities and changed its name to B. Riley Wealth Management. B. Riley Wealth Management is a FINRA-registered broker-dealer. It is a subsidiary of B. Riley Financial. According to its website, B. Riley Financial specializes in restructuring, special acquisitions, and mergers.

B. Riley Wealth Management also does or has done business under the following names:

• • Wundtrade
  • Wunderlich Securities Inc.
  • Fundamental Capital Markets
  • Fundamental Brokers Inter-Dealer
  • Fiduciary Financial Services Wealth Management
  • Dominick & Dominick
  • Capital Securities of America

“B. Riley Wealth” may also refer to Riley Wealth Advisors, which is an SEC-registered investment adviser, or B. Riley Wealth Portfolio Advisors, another SEC-registered investment adviser.

• B. Riley Principal Investments is an affiliate of B. Riley Financial that offers investment opportunities to institutional investors, i.e., companies and not individual retail investors.
• B. Riley Securities is an investment bank that deals in mergers and acquisitions, initial and secondary public offerings, and private placements.

B. Riley Wealth Management’s headquarters are located in Memphis, Tennessee. It is registered in 53 U.S. states and territories.

What is the Difference Between a Broker -Dealer and an Investment Adviser?

Broker-dealers handle the execution of securities transactions. Broker-dealer representatives may also recommend securities. Investment advisors actively manage portfolios and may help with tax and estate planning.

• Registered investment advisers are fiduciaries who must recommend investments in their client’s best interest.
• Brokers must abide by Regulation Best Interest, which requires them to exercise reasonable care and skill when they make a recommendation. Brokers do not, however, owe their customers a fiduciary duty.

Regulatory Actions

According to the firm’s BrokerCheck profile, B. Riley has a total of 23 regulatory disclosures. This includes penalties and fines. Investors should know that these disclosures include allegations that the firm has at various points failed to adequately supervise its brokers. 

Failure to Supervise 529 College Savings Plans

On December 30, 2020, the firm consented to findings that the firm failed to establish a supervisory system reasonably designed to supervise the recommendations to purchase particular share classes of 529 savings plans. 529 savings plans are college savings accounts. According to the Acceptance, Waiver, and Consent agreement, the firm did not provide adequate guidance for considering the different share-class recommendations. These allegations involved 620 accounts and at least $4.6 million in 529 plan shares.

As part of the sanctions, the firm was ordered to pay restitution and interest in the amount of $252,740.

Failure to Report Mortgage-Backed Securities

Another regulatory action highlights an alleged supervisory failing by B. Riley Wealth Management, d.b.a. Wunderlich Securities, Inc. Without admitting or denying the findings, B. Riley consented to the findings that it failed to report 450 mortgage-backed securities using the Trade Reporting and Compliance Engine (TRACE), as required by FINRA.

FINRA fined Wunderlich Securities $17,000.

B Riley Financial News

Investors should know about these B. Riley news headlines.

SEC Investigation

Bloomberg reported that the SEC had opened an investigation into B. Riley’s deals with a client who has been linked to securities fraud.

Brian Kahn and Financial Group 

Concerns have arisen regarding B. Riley Financial’s relationship with hedge fund manager Brian Kahn, concerns that contributed to the recent decline in B. Riley Financial’s share prices. The Wall Street Journal has reported that B. Riley share prices have declined 60% since August.

In 2023, B. Riley Financial acquired an equity stake in Financial Group worth $281 million, which helped Brian Kahn complete a management buyout. Financial Group owns Vitamin Shoppe, a furnishing company called W.S. Badcock, and Sylvan Learning. S&P Global Ratings downgraded Financial Group’s credit rating in November, citing operating losses from Badcock.

The trouble with Financial Group doesn’t end there. According to The Wall Street Journal, a pattern of transactions between B. Riley and Financial Group indicates that B. Riley purchased a $64.6 of that equity investment directly from Kahn, which B. Riley allegedly did not initially disclose. The firm did disclose that it lent $201 million to Brian Kahn’s investment firm.

Brian Kahn served as an outside adviser for Prophecy Asset Management, a firm that allegedly engaged in fraud and hid its trading losses. In a lawsuit against Prophecy, certain clients alleged that Brian Kahn diverted funds from Prophecy to add to his controlling stake of Franchise Group.

A B. Riley spokeswoman told The Wall Street Journal, “We remain confident in the investment proposition and believe this will turn out to be a value-enhancing transaction for our investors.” But Financial Group’s recent losses remain a major concern for stakeholders. Furthermore, doubts surround the sagacity of B. Riley loan to Brian Kahn, especially as questions still loom over his involvement with Prophecy. As of posting, Khan has not been charged with any crime.

Merger with National Holdings

In 2018, B. Riley Financial became National Holding Corporation’s largest shareholder. B. Riley Wealth merged with National Holdings in 2021, incorporating its $20 billion in assets under management and 700 representatives.

B. Riley Wealth Management and Wunderlich Securities

Riley filed a complaint in January 2022 alleging that the former Wunderlich Securities CEO had not contributed to an $11 million settlement. B. Riley acquired Wunderlich in 2017. The settlement followed allegations that Wunderlich Securities and its owner, Gary Wunderlich, had misrepresented the firm’s financial condition.

Have You Suffered Losses After Working with B. Riley Wealth Management?

Investors may have suffered losses following misconduct by their broker.

• A B. Riley Wealth Management customer recently alleged they suffered losses following a broker’s excessive trading.
• Another dispute alleged that a B. Riley broker had recommended unsuitable, speculative investments.
• According to allegations from February 2022, a B. Riley representative made unauthorized stock purchases.

These are just a few recent examples. Contact a securities attorney if you have concerns about your B. Riley investments.

B. Riley Conflicts of Interest

Investors should be aware of the variety of conflicts of interest that can affect a broker’s recommendations.

• Riley Wealth Management’s Form CRS reveals that because each securities transaction comes with a fee, brokers may be incentivized to recommend that you trade more often.
• Certain classes of mutual funds come with 12b-1 fees for brokers. These fees may motivate your broker to recommend these shares over other types of mutual funds that do not charge fees.
• Riley Securities, an affiliate of B. Riley Wealth Management, is instrumental in bringing certain stocks and bonds to market. Brokers may be incentivized to recommend these products over other third-party products.
• Riley earns money on shares that it sells from its own account. As such, representatives have an incentive to recommend securities that it can sell from its own account, rather than an outside seller.

B. Riley Wealth Management Fees

Riley’s brokerage accounts may come with the following fees:

• Riley offers margin accounts, which use money borrowed from the securities firm to buy securities. These accounts charge interest on the borrowed money.
• Account maintenance fees
• Custodian fees: Clearing firms may pass on fees for holding certain securities in their accounts.
• Annuity sales and surrender charges: Certain annuities, such as variable annuities, may come with steep surrender fees.
• Mutual 12b-1 fees
• Account transfer fees
• Standard banking fees
• Cash sweep: B. Riley Wealth receives revenue from clearing firms for cash sweep deposits.
• Advisory fees: The fees mentioned above are for the brokerage service. If investors also engage an advisor, they will be charged fees for those services as well.

Have You Suffered Losses After Working with B. Riley Wealth Management?

Investors may have suffered losses following misconduct by their B. Riley broker.

• A B. Riley Wealth Management customer recently alleged they suffered losses following a broker’s excessive trading.
• Another alleged that a B. Riley broker recommended unsuitable, speculative investments.
• According to allegations from February 2022, a B. Riley representative made unauthorized stock purchases.

These are all common broker misconduct allegations. Let an attorney know if you have concerns about your B. Riley investments.

What Can I Do if I Lost Money on B. Riley Wealth Investments?

Securities attorneys can help investors recover money lost as a result of broker fraud or misconduct. Securities rules and regulations are designed to prevent brokers from recommending overly risky or unnecessarily expensive investments to their clients.

If you were not aware of the potential downsides of an investment before you suffered losses, contact our experienced securities attorneys at (877) 600-0098 or info@kurtalawfirm.com. Kurta Law attorneys provide free case evaluations and only earn a fee if we win your case.