B. Riley shares drop after short-seller Wolfpack Research takes aim

(Reuters) – Shares of investment bank B. Riley Financial fell more than 8% after short-seller Wolfpack Research on Wednesday disclosed a short position in the stock.

B. Riley had overleveraged to buy speculative assets during the “financial mania” of 2020-21 and lent money to companies that have “degenerated into zombies,” the short-seller alleged.

The bank did not immediately respond to a Reuters request for comment.

Wolfpack alleged B. Riley was not cutting losses on “failing” investments but had continued extending its distressed clients more capital, like the loan to cryptocurrency mining company Core Scientific Inc, which filed for bankruptcy in December.

The investment bank was also the sole book-running manager for Bed Bath & Beyond Incs $225 million equity offering, which has extended a lifeline to the struggling retailer as it tries to avoid bankruptcy.