B. Riley (RILY) debt securities taking a hit...

Raising Cash.... looks like the whole family had to chip in.

https://www.sec.gov/Archives/edgar/data/1464790/000121390023092322/ea189323ex99-6_arena.htm

This was their interest in Arena Group Holdings... (AREN $3.03)
Sold it all back to them for $2.90ish
Not sure how long they owned the stock, but it was $14 a year ago.


2.1 Purchase. On the terms and subject to the conditions herein, at the Closing (as defined below), each of the following Sellers agrees to sell, or cause to be sold, to the Purchaser the number of shares of common stock, par value $0.01 per share, of the Company (the “Common Stock”), in each case, indicated below across from such Seller’s name (collectively, the “Purchased Shares”), for an aggregate purchase price for all Purchased Shares of $27,283,533.50 (the “Purchase Price”):



Sellers Purchased Shares
BRF Investments, LLC 5,323,282
B. Riley Securities, Inc. 363,246
B. Riley Principal Investments, LLC 29,342
BRC Partners Opportunity Fund, LP 1,187,598
272 Capital Master Fund Ltd. 820,500
Bryant and Carleen Riley JTWROS 1,588,642
Bryant Riley C/F Abigail Riley UTMA CA 23,232
Bryant Riley C/F Charlie Riley UTMA CA 25,809
Bryant Riley C/F Susan Riley UTMA CA 23,232
Bryant Riley C/F Eloise Riley UTMA CA 23,232
Total Purchased Shares: 9,408,115
 
Last edited:
vanzandt said:
Raising Cash.... looks like the whole family had to chip in.

https://www.sec.gov/Archives/edgar/data/1464790/000121390023092322/ea189323ex99-6_arena.htm

This was their interest in Arena Group Holdings... (AREN $3.03)
Sold it all back to them for $2.90ish
Not sure how long they owned the stock, but it was $14 a year ago.


2.1 Purchase. On the terms and subject to the conditions herein, at the Closing (as defined below), each of the following Sellers agrees to sell, or cause to be sold, to the Purchaser the number of shares of common stock, par value $0.01 per share, of the Company (the “Common Stock”), in each case, indicated below across from such Seller’s name (collectively, the “Purchased Shares”), for an aggregate purchase price for all Purchased Shares of $27,283,533.50 (the “Purchase Price”):



Sellers Purchased Shares
BRF Investments, LLC 5,323,282
B. Riley Securities, Inc. 363,246
B. Riley Principal Investments, LLC 29,342
BRC Partners Opportunity Fund, LP 1,187,598
272 Capital Master Fund Ltd. 820,500
Bryant and Carleen Riley JTWROS 1,588,642
Bryant Riley C/F Abigail Riley UTMA CA 23,232
Bryant Riley C/F Charlie Riley UTMA CA 25,809
Bryant Riley C/F Susan Riley UTMA CA 23,232
Bryant Riley C/F Eloise Riley UTMA CA 23,232
Total Purchased Shares: 9,408,115
More...

Just wondering...Could some of those kids (when they turn 18) sue R. Riley for not protecting their trust (Uniform Trust for Minors Act)?? Did the company break the fiduciary bond responsibility???

The primary responsibility of fiduciaries is to run the plan solely in the interest of participants and beneficiaries and for the exclusive purpose of providing benefits and paying plan expenses. Fiduciaries must act prudently and must diversify the plan's investments in order to minimize the risk of large losses.
 
vanzandt said:
Raising Cash.... looks like the whole family had to chip in.
More...

It sounds like you are inferring that they need to "raise cash," and that their need to raise cash is somehow related to the potential trouble at Franchise Group...

That is certainly possible. But the SEC filing just tells us that they sold stock. It doesn't tell us why, or what their motivation was.

It is interesting that so many members of the family are unloading the same stock all at the same time. But that's probably not that unusual among HNW families that have concentrated interests in a particular stock, with the interest spread among various entities and individual members of the same family.

Cabin111 said:
...Could some of those kids (when they turn 18) sue R. Riley for not protecting their trust (Uniform Trust for Minors Act)?? Did the company break the fiduciary bond responsibility???

The primary responsibility of fiduciaries is to run the plan solely in the interest of participants and beneficiaries and for the exclusive purpose of providing benefits and paying plan expenses. Fiduciaries must act prudently and must diversify the plan's investments in order to minimize the risk of large losses.
More...

First, I would point out that the SEC data identifies the custodian for each of those accounts as Bryant Riley. B. Riley as a company is not involved. The use of his full name indicates that he is the custodian in his capacity as an individual.

Could the children sue? Probably not. It looks like you may have copied and pasted that text about the responsibility of fiduciares. And the use of the phrase "run the plan" suggests that the text was copied and pasted from something that was talking about retirement plans, or possibly employer-sponsored health care plans, or... well, something other than a UTMA.

The "prudent investor rule" and the diversification requirement are not always applicable to a UTMA.

If I'm a retired factory worker, and I want to buy my four-year old grandchild $2500 worth of stock in some start up that no one has ever heard of, that might be worthless in two years, or worth millions in 10 years, I can do that. I can do it with a UTMA, and I can name myself as the custodian. And no judge is going to tell me that I am violating my fiduciary duty because I have not "diversified" the money across a range of investments. The real world just doesn't work that way.

At least not when the amount of money in question is $2500.

I will concede that at some point, some responsibility kicks in, but I think it's hard to define that point, and it is certainly on a case-by-case basis. If that stock does indeed soar in value to $1.8 million, and the kid is now 14 years old, the custodian might have some duty to at least consult a professional advisor and evaluate whether it is a good idea to keep all that money in a single stock, especially if the kid doesn't have any other significant assets. In fact, that duty might kick well before the stock becomes worth $1.8 million.

But the threshold is not just a dollar amount. It's also a question of ratio, or the value of the assets in trust relative to the child's other assets, and the family's other assets.

The context matters.

Each UTMA sold about $67,000 worth of AREN stock.

Each child may well have other assets in trust, in different accounts, diversified across many different asset classes.

And in any case, for a HNW family like the Rileys, $67K is analogous to $2500 for the factor worker's grandchild. For the Riley children, $67K is so relatively small that putting it into a single stock may not be irrational or irresponsible.
 
BMK said:
It sounds like you are inferring that they need to "raise cash," and that their need to raise cash is somehow related to the potential trouble at Franchise Group...

That is certainly possible. But the SEC filing just tells us that they sold stock. It doesn't tell us why, or what their motivation was.

It is interesting that so many members of the family are unloading the same stock all at the same time. But that's probably not that unusual among HNW families that have concentrated interests in a particular stock, with the interest spread among various entities and individual members of the same family.



First, I would point out that the SEC data identifies the custodian for each of those accounts as Bryant Riley. B. Riley as a company is not involved. The use of his full name indicates that he is the custodian in his capacity as an individual.

Could the children sue? Probably not. It looks like you may have copied and pasted that text about the responsibility of fiduciares. And the use of the phrase "run the plan" suggests that the text was copied and pasted from something that was talking about retirement plans, or possibly employer-sponsored health care plans, or... well, something other than a UTMA.

The "prudent investor rule" and the diversification requirement are not always applicable to a UTMA.

If I'm a retired factory worker, and I want to buy my four-year old grandchild $2500 worth of stock in some start up that no one has ever heard of, that might be worthless in two years, or worth millions in 10 years, I can do that. I can do it with a UTMA, and I can name myself as the custodian. And no judge is going to tell me that I am violating my fiduciary duty because I have not "diversified" the money across a range of investments. The real world just doesn't work that way.

At least not when the amount of money in question is $2500.

I will concede that at some point, some responsibility kicks in, but I think it's hard to define that point, and it is certainly on a case-by-case basis. If that stock does indeed soar in value to $1.8 million, and the kid is now 14 years old, the custodian might have some duty to at least consult a professional advisor and evaluate whether it is a good idea to keep all that money in a single stock, especially if the kid doesn't have any other significant assets. In fact, that duty might kick well before the stock becomes worth $1.8 million.

But the threshold is not just a dollar amount. It's also a question of ratio, or the value of the assets in trust relative to the child's other assets, and the family's other assets.

The context matters.

Each UTMA sold about $67,000 worth of AREN stock.

Each child may well have other assets in trust, in different accounts, diversified across many different asset classes.

And in any case, for a HNW family like the Rileys, $67K is analogous to $2500 for the factor worker's grandchild. For the Riley children, $67K is so relatively small that putting it into a single stock may not be irrational or irresponsible.
More...
What I wanna know is... who in the hell names their kid Eloise? Were Beatrice and Gertrude taken?
 
BMK said:
It sounds like you are inferring that they need to "raise cash," and that their need to raise cash is somehow related to the potential trouble at Franchise Group...

That is certainly possible. But the SEC filing just tells us that they sold stock. It doesn't tell us why, or what their motivation was.

It is interesting that so many members of the family are unloading the same stock all at the same time. But that's probably not that unusual among HNW families that have concentrated interests in a particular stock, with the interest spread among various entities and individual members of the same family.



First, I would point out that the SEC data identifies the custodian for each of those accounts as Bryant Riley. B. Riley as a company is not involved. The use of his full name indicates that he is the custodian in his capacity as an individual.

Could the children sue? Probably not. It looks like you may have copied and pasted that text about the responsibility of fiduciares. And the use of the phrase "run the plan" suggests that the text was copied and pasted from something that was talking about retirement plans, or possibly employer-sponsored health care plans, or... well, something other than a UTMA.

The "prudent investor rule" and the diversification requirement are not always applicable to a UTMA.

If I'm a retired factory worker, and I want to buy my four-year old grandchild $2500 worth of stock in some start up that no one has ever heard of, that might be worthless in two years, or worth millions in 10 years, I can do that. I can do it with a UTMA, and I can name myself as the custodian. And no judge is going to tell me that I am violating my fiduciary duty because I have not "diversified" the money across a range of investments. The real world just doesn't work that way.

At least not when the amount of money in question is $2500.

I will concede that at some point, some responsibility kicks in, but I think it's hard to define that point, and it is certainly on a case-by-case basis. If that stock does indeed soar in value to $1.8 million, and the kid is now 14 years old, the custodian might have some duty to at least consult a professional advisor and evaluate whether it is a good idea to keep all that money in a single stock, especially if the kid doesn't have any other significant assets. In fact, that duty might kick well before the stock becomes worth $1.8 million.

But the threshold is not just a dollar amount. It's also a question of ratio, or the value of the assets in trust relative to the child's other assets, and the family's other assets.

The context matters.

Each UTMA sold about $67,000 worth of AREN stock.

Each child may well have other assets in trust, in different accounts, diversified across many different asset classes.

And in any case, for a HNW family like the Rileys, $67K is analogous to $2500 for the factor worker's grandchild. For the Riley children, $67K is so relatively small that putting it into a single stock may not be irrational or irresponsible.
More...

That was a copy and paste (Google) concerning UTMA...Their first response. So yeah, it is valid.

I won't get too technical...I was in the middle of a UTMA (a mess)!! Lawyers were involved. I had to take over responsibility for a trust!! NO FUN!!

Just saying, I have first hand knowledge of what is expected...
 
Well, now, here's one bloke over at Seeking Alpha who apparently agrees with me...

I've attached his analysis of the RILY bonds.

In response to a comment on his analysis, he wrote:

The losses stem from the investment side of the business. The fee side of the business is what produces recurring income, which is what pays the bills - including interest. Losses on the investment side are far more important for common shareholders who have an interest in excess earnings. It isn't so important for the baby bonds, which will have the same return whether RILY makes the best investment returns of all time, or whether they make horrible investments year after year. The only thing bonds are concerned about is that the company remains solvent. I don't see anything happening on the investment side as approaching anything close enough to creating a significant risk of insolvency.
 

Attachments

BMK said:
Well, now, here's one bloke over at Seeking Alpha who apparently agrees with me...

I've attached his analysis of the RILY bonds.

In response to a comment on his analysis, he wrote:

The losses stem from the investment side of the business. The fee side of the business is what produces recurring income, which is what pays the bills - including interest. Losses on the investment side are far more important for common shareholders who have an interest in excess earnings. It isn't so important for the baby bonds, which will have the same return whether RILY makes the best investment returns of all time, or whether they make horrible investments year after year. The only thing bonds are concerned about is that the company remains solvent. I don't see anything happening on the investment side as approaching anything close enough to creating a significant risk of insolvency.
More...

How could you go wrong with a 9.6% two year corporate bond!!

It speaks for itself...
 
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