Babcock & Wilcox Faces Class Action Over $2.4B AI Deal and 140% Exit Sale
Investors in Babcock & Wilcox Enterprises have filed a securities class action claiming that BRC Group Holdings orchestrated a $2.4 billion AI power generation contract to inflate the company's share price. BRC then sold its entire stake for $10.4 million at a 140% premium, triggering an 11.59% stock drop.
1. Alleged Related-Party Contract Conflict
BRC Group Holdings, the largest shareholder, allegedly stood on both sides of a $2.4 billion AI power generation deal through its co-CEO Bryant R. Riley serving as a director of Base Electron, the contract counterparty. Base Electron was incorporated weeks after the preliminary agreement and shared BRC's registered address, raising conflict concerns.
2. Exit Liquidity Scheme and Market Impact
BRC reportedly sold its entire Babcock & Wilcox stake for $10.4 million at $9 per share, a 140% premium over pre-announcement levels, on February 11, 2026. The stock fell 11.59% after a short seller's report, while the company raised $67.5 million in an at-the-market offering underwritten in part by BRC, paused then resumed without disclosing the related-party link.
3. Securities Class Action and Next Steps
Investors who bought shares between November 5, 2025 and March 11, 2026 have until June 15, 2026 to seek lead plaintiff status in the proposed securities class action. The complaint alleges material omissions regarding BRC’s involvement in the contract, and seeks to recover losses from the inflated share prices driven by the transaction.