Aug 19 (Reuters) - B. Riley Financial ( RILY ) shares

dropped 8.6% in premarket trading on Monday, coming off a

turbulent week that ended in the co-founder and co-CEO Bryant

Riley offering to buy the bank.

The Los Angeles, California-based lender stock ended 16%

higher at $5.85 on Friday. Still, below Riley's unsolicited

offer of $7 apiece that values the investment bank at $212

million, reflecting a 39% premium to the stock's Thursday close.

Last week, the stock plummeted by a record 65.5% and hit a

decade low after the bank warned of a second-quarter loss,

adding to concerns over its ill-fated investment in Vitamin

Shoppe-owner Franchise Group, which has been under scrutiny.

B. Riley and its CEO received subpoenas from the U.S.

Securities and Exchange Commission in July. The subpoenas were

primarily related to the bank's dealings with Franchise's former

CEO, Brian Kahn.

In November, Bloomberg News reported that Kahn was a

co-conspirator in a securities fraud involving Prophecy Asset

Management.

Kahn has denied the allegations made in the report, saying

he never knew that Prophecy Asset was allegedly defrauding

investors. Earlier this year, an external investigation as well

as an internal review cleared B. Riley of any wrongdoing.