B. Riley’s Money Machine Ensnared Retail Investors $25 at a Time

Retail investors are caught in the crossfire of B. Riley Financial Inc.’s downward spiral.

The Los Angeles-based investment firm’s mounting problems, from regulatory probes to record losses, are shining a light on one of its favored fundraising strategies. B. Riley is a self-proclaimed leader in baby bonds — fixed-income securities issued in denominations small enough to appeal to everyday investors, rather than the million-dollar increments favored by institutions.

B. Riley raised more than $1.5 billion in recent years to strengthen its own balance sheet by selling baby bonds for as little as $25 per note. The acquisition of National Holdings Corp. in 2021 turbocharged the process, giving B. ...