B Riley Turns to BDO Amid Reporting Delays

B. Riley Financial is trying to turn a corner with fresh numbers and a new auditor. The firm reported about $201 million in revenue for Q2 2025 and projects $405–$425 million for the first half of 2025, alongside an estimated net income of up to $145 million. That’s a sharp swing from the $772 million net loss in 2024, when cascading writedowns tied to Franchise Group battered the balance sheet. But the improved topline doesn’t erase the urgency: B. Riley has tapped BDO USA to replace Marcum LLP as auditor for 2025, just weeks before a critical September 29 deadline to avoid Nasdaq delisting.

A Rise, a Bet, and a Breakdown

B. Riley’s troubles didn’t appear overnight. The Los Angeles brokerage, once riding high with shares near $60, leaned heavily into deals with Franchise Group. In 2023, it financed the retailer’s management buyout with $600 million in debt, plus a $201 million loan to Vintage Capital. When Franchise Group filed for bankruptcy in late 2024, those bets imploded. Marcum, the firm’s longtime auditor, identified material weaknesses in B. Riley’s 2023 filings, including shaky valuation models and inadequate disclosure of related-party transactions. That criticism became sharper as losses mounted, with additional markdowns of $330–$370 million flagged on top of the multihundred-million-dollar net loss. Regulators moved in quickly: the SEC launched an investigation into related-party dealings, including a $100 million loan to Brian Kahn, while FINRA opened a cause exam into B. Riley’s wealth management arm.

The combination of investment losses, internal control failures, and regulatory scrutiny set the stage for what came next: a credibility crisis that sent shares tumbling by more than 80% and reduced the market cap to approximately $156 million by September 2025.

A Deadline and a Gamble on BDO

On September 9, 2025, B. Riley formally appointed BDO USA as its 2025 auditor, even as Marcum continues to work on the overdue 2024 audit and 10-K filing. The dual arrangement is unusual, but management argues that it gives the company the best chance of restoring timely reporting. Nasdaq has made it clear: September 29 is the final extension, with no further lifelines. Chairman and Co-CEO Bryant Riley put it plainly: regaining timely reporting is “a critical corporate priority.” CFO Scott Yessner added that “substantial progress” has been made on 2025 filings. Still, the optics aren’t great. Auditor overlap typically signals friction, and for investors, it raises the question of whether B. Riley is fixing the root issues or just firefighting.

Can Credibility Be Bought with Time?

The near-term goal is simple: file the delinquent reports and avoid delisting. Longer term, though, the company’s survival depends on more than paperwork:

• Clean, timely filings. Meeting the September 29 deadline is essential, but consistency in 2025 and beyond will determine if investor confidence can be rebuilt.
• Recurring profitability. H1 2025 net income of $125–145 million is encouraging; however, much of it stems from asset sales and debt exchanges, rather than core operations. 
• Debt discipline. Total debt decreased by approximately $600 million from late 2024 to mid-2025, with proceeds from sales, such as those of GlassRatner and Atlantic Coast Recycling, contributing to increased liquidity. But leverage remains a shadow over the business.
• Governance reform. SEC and FINRA scrutiny over related-party dealings won’t disappear until the company demonstrates stronger controls and transparent reporting. 

Takeaways Worth Filing on Time

• Internal controls matter: Weak valuation methods and sloppy oversight don’t stay hidden; they surface when markets turn or regulators take a closer look.
• Transparency is a matter of survival: related-party transactions must be disclosed clearly; anything less invites scrutiny and reputational damage.
• Timely reporting is non-negotiable: Missed deadlines don’t just frustrate investors; they can put a listing at risk.
• Auditor switches aren’t magic: They may reset credibility, but sustainable trust requires stronger governance and disciplined reporting.
• Core operations must deliver: One-time gains from asset sales or debt deals can buy time, but long-term confidence hinges on recurring profitability.

Final Take

The switch to BDO is a signal move, but it’s not a cure. B. Riley’s turnaround depends on demonstrating to regulators, auditors, and investors that the company has learned from its missteps and can operate a cleaner, more disciplined business. With the September 29 deadline looming, the next few weeks will decide if this story becomes a comeback or a cautionary tale about what happens when controls slip and bets backfire. In finance, numbers are more than disclosures. They’re trust, reputation, and ultimately, survival. And right now, B. Riley is running out of all three.