Freedom Holdings, an online brokerage firm with a market capitalization of $4.6 billion, has been making headlines since its inception in 2008. Its Chairman & CEO, Timur Turlov, a multi-billionaire, holds 70% of the company’s shares. Originally based in Moscow, the company was listed on the Nasdaq in 2019. Its shares soared by over 450%. A report of the short-sellers Hindenburg Research exposed some alarming concerns.
Key Findings:
- Sanctions and Regulatory Concerns: Hindenburg Research suggests that Freedom has consistently evaded sanctions, displayed signs of fabricated revenue, and misused customer funds. There are also indications of market manipulation in both its investments and its publicly traded shares.
- Russian Ties and the Ukraine Crisis: Before Russia’s invasion of Ukraine in 2022, Freedom had identified both nations as pivotal to its growth strategy. However, post-invasion, in a bid to sidestep sanctions, Freedom hastily sold its Russian business to an employee for $140 million. Despite this, Turlov is believed to still secretly control the entity. This maneuver did not go unnoticed, leading to Ukraine suspending Freedom’s brokerage license and freezing its assets. Turlov himself faced personal sanctions from Ukrainian President Volodymyr Zelensky due to his connections with Russia.
- Questionable Revenue Sources: Despite losing significant markets, Freedom claims its revenue growth remains robust, attributing it to Kazakhstan. However, Hindenburg Research findings suggest that Freedom continues to operate in the Russian market, openly defying sanctions and regulations.
- Admission of Sanctions Evasion: In a shocking revelation, Freedom admitted in its latest annual report that it provided services to individuals and entities subjected to sanctions by various international bodies.
- Belizean Entity and Revenue Concerns: Hindenburg Research investigation also delved into Freedom‘s dealings with a Belizean entity privately owned by Turlov. This entity, FFIN Belize, has been instrumental in driving Freedom‘s revenue growth, accounting for a significant portion of its total reported revenue.
- Market Manipulation: Hindenburg Research indicates potential market manipulation in Freedom’s stock, with consistent trading volumes and prices that seem immune to market fluctuations and company-specific news.
- Ties with Small Brokerage Firms: A significant portion of trading in Freedom’s stock has been driven by two small brokerage firms, Lek Securities and Vision Financial Markets, both of which have ties to Freedom and have faced regulatory issues in the past.
- Regulatory Sanctions: Freedom has faced multiple sanctions, with four of its entities in Kazakhstan receiving penalties for various allegations, including money laundering and terrorism financing.
- Undisclosed SEC Investigation: Reports suggest that Freedom has been under SEC investigation since at least October 2021, a fact the company failed to disclose.
In conclusion, while Freedom Holdings may present an enticing facade, our investigation has revealed a myriad of red flags that warrant serious scrutiny. The company’s actions, ranging from sanctions evasion to potential market manipulation, highlight the need for rigorous oversight and due diligence in the financial sector.
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