Invested in
Freedom Holding Corp?
- Did you acquire shares of Freedom Holding Corp (Nasdaq: FRHC) prior to 2022, and do you still hold your FRHC shares?
- Are you concerned about the FRHC stock price decline following recent report alleging the company’s violations of international sanctions against Russia-related entities, disregard of anti-money laundering (AML) and know-your-customer (KYC) rules, and regulatory issues, among others?
- Would you like your potential options and claims to be reviewed by an experienced team of investor attorneys?
Request a free case evaluation of your potential claims for compensation today, via email at arosca@rscounsel.law, through the contact form on this page, or by calling 888-998-0530.
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The Freedom Holding Class Action Investigation page is the resource for investors who bought Freedom Holding shares before 2022 and would like to evaluate compensation claims.
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Posted August 16, 2023
Freedom Holding Class Action Investigation
Securities attorneys Alan Rosca, Paul Scarlato, and Kathryn Weidner have been investigating alleged securities violations, corporate misconduct, and misrepresentations, as well as questionable business practices involving Freedom Holding Corp, and have identified potential areas of concern for Freedom Holding investors.
What Freedom Holding Investors May Do
FRHC investors interested in an evaluation of their potential options to seek compensation and/or pursue claims related to their Freedom Holding investment may contact investor rights attorneys Alan Rosca, Paul Scarlato, or Kathryn Weidner. Claims that are not timely pursued may expire or otherwise be lost, generally speaking.
Get in Touch with an Experienced Team of Investor Attorneys
Attorneys Rosca, Scarlato, and Weidner have extensive experience in seeking compensation related to investor harm and pursuing claims arising out of alleged violations of securities law and/or corporate misconduct, and are currently evaluating potential claims on behalf of investors in Freedom Holding Corp.
They typically work on a contingent fee basis, do not require any money down from their clients, advance case expenses, and only get paid for their fees and expenses if and when successful, following review and approval by the Court of any fee application.
Concerned FRHC investors may contact attorneys Alan Rosca, Paul Scarlato, or Kathryn Weidner to discuss their potential options toll free at 888-998-0530, via email at arosca@rscounsel.law, or through the contact form on this webpage.
Potential Compensation Claims
Allegations of Violation of International Sanctions and Money Laundering Rules Involving Freedom Holding; FRHC Stock Price Declines
On August 15, 2023, an investor and short seller organization known as Hindenburg Research, published a report (“the Research Report” or “Report”) revealing a long list of serious allegations of impropriety, and on the same day the FRHC stock reportedly declined on far higher trading volume than typically.
Is Freedom Holding Exposed to the Russian Market in Violation of International Sanctions?
The Hindenburg Research Report alleges that Freedom Holding’s brokerage business “grew significantly” after Russia’s 2014 invasion of Ukraine. In 2015, Freedom purchased a regional bank controlled by a Putin associate who at the time was subject to U.S. sanctions, according to the Report.
Then, in an attempt to avoid sanctions imposed after the Russian’s 2022 invasion of Ukraine, Freedom allegedly sold its business in Russia to one of Freedom Holding’s CEO, Timur Turlov childhood friends, with Mr. Turlov secretly retaining control of that business, the Research Report alleges.
According to the Report, despite allegedly losing its access to its top two largest markets, Russia and Ukraine, Freedom Holding managed to report a suspicious, 156% increase in revenue in 2023. In its latest 10K, filed in early August 2023, the company disclosed it maintains brokerage accounts “for certain other institutional brokerage clients, including certain Russian institutions.” Freedom Holding further disclosed that two of its subsidiaries “provided brokerage services to certain individuals and entities who are subject to sanctions imposed by OFAC, the European Union or the United Kingdom,” the Report alleges.
Did Freedom Holding Breach Anti-Money Laundering and KYC Rules?
The Hindenburg Research Report reportedly quotes former Freedom Holding employees who allegedly knew about money being funneled out of Russia through a Belizean company, that was allegedly privately owned by Mr. Turlov. According to one of the Freedom’s former senior executives, these transactions were done in complete absence of KYC and AML checks. “The best part is this is violating almost every country’s anti-money and anti-terrorist financing laws,” the former senior executive reportedly stated, as per the Report. Cash and crypto investments were allegedly readily accepted while in some instances local money transfer networks were used to move “dirty money” and put it in the stock markets, the Report further notes.
Potential Compensation Claims
Were Freedom Holding’s Financial Reports Inaccurate?
Between 2018 and 2020, Freedom Holding failed to make relevant related party disclosures, according to the Report.
A December 2020 expose by The Foundation for Financial Journalism reportedly brought to light Freedom Holding’s dealings with an unnamed related party called FFIN Brokerage Services (now renamed Freedom Securities Trading), the Hindenburg Report alleges. The Freedom Holding investors were informed of related party’s identity and its significance in driving company revenue growth only in the filings with Securities and Exchange Commission (“SEC”) for the fiscal year 2021, the Research Report alleges.
Consequently, in December 2022, the Public Company Accounting Oversight Board barred and fined three individuals for “violations in connection with the audits and reviews of Freedom Holding Corp,” the Report states.
In addition, the Research Report indicates that Freedom Holding “has restated its financials four times on the back of cash flow accounting discrepancies, has recast its annual financials in six separate years and was late in filing on nine occasions.” In a recent 10K, the Company informed investors its disclosure controls and procedures were not effective due to the material weaknesses in internal control over financial reporting.
Did a Freedom Holding Affiliate Commingle Customer Funds and Place Them at Risk?
The Research Report further alleges that FFIN Brokerage Services disclosed on its website that it “unifies” client funds in a single account exposing the funds to the risk of being “erroneously” written off. Furthermore, according to the same risk disclosures FFIN Brokerage Services “shall have the right to use the Client’s monetary funds/securities in its own interests free of charge,” according to the Report.
In October 2021, the Kazakhstan’s financial market regulator reportedly blacklisted FFIN Brokerage Services for “signs of illegal activity in the territory of Kazakhstan” in connection with soliciting investments by guaranteeing returns, the Report states.
Should Freedom Holding Investors Be Concerned?
After reportedly reviewing Freedom Holding’s trading patterns, the Research Report concluded that over the last year and a half close to 60% of trading in FRCH was allegedly driven by two small brokerage firms, Lek Securities and Vision Financial Markets. The Report further alleges the brokerage firms both disclosed clearing agreements with Freedom Holding. According to the Research Report, the high concentration of trading between only two small brokerage firms usually indicates market manipulation.
In 2017, Lek Securities was subject to a SEC complaint charging the broker dealer with manipulative trading. In 2019 SEC announced the final judgment against Lek permanently barring its founder Samuel Lek from the securities industry. In addition, the FINRA Brokercheck report for Lek Securities shows the company was subject of over 40 regulatory events and the company’s SEC registration status has been terminated since March 2023.
The Brokercheck Report for Vision Financial Markets discloses 26 regulatory events. In 2014 the National Futures Association reportedly barred Vision from the futures markets for allegedly facilitating the misappropriation of customer funds by another company, among others.
Does Freedom Holding Risk of Regulatory Sanctions?
Freedom Holding allegedly failed to disclose it has been subject to SEC’s investigative activity since at least late October 2021, according to Report’s findings.
Potential Claims for Compensation for Freedom Holding Shareholders
Investor rights attorneys Alan Rosca, Paul Scarlato, and Kathryn Weidner at Rosca Scarlato are investigating potential options and are evaluating potential claims for compensation on behalf of FRHC shareholders who have held FRHC shares since 2021 or earlier. They have decades of combined experience representing victims of corporate or financial misconduct.
If you are a Freedom Holding investor concerned about your investment and/or its value and have purchased your Freedom shares before 2022, you may contact attorneys Alan Rosca, Paul Scarlato, or Kathryn Weidner to learn more about your rights and for an evaluation of your potential claims, or to provide useful information.
All consultations are free. The Rosca Scarlato attorneys typically take cases like this on a contingency fee basis, advance all case costs, and only get paid for their fees and expenses if and when they are successful, following review and approval by the Court of any fee application.
To reach attorney Alan Rosca or his colleagues, Freedom Holding investors may call 888-998-0530, email arosca@rscounsel.law, or leave a message through the contact form on this webpage.
The general considerations on this page are for informational purposes only and do not constitute legal advice. Such legal advice can only be offered once the attorneys discuss each investor’s situation, learn of the relevant facts and can tailor any advice to that investor’s facts. The Freedom Holding Class Action Investigation page is not affiliated with Freedom Holding Corp. There has not been an adjudication on the merits of any allegations referenced in this blog post, as of the date of the posting.
Contact info:
Rosca Scarlato LLC – 216-946-7070 / 888-998-0530.
Alan Rosca – arosca@rscounsel.law
Paul Scarlato – pscarlato@rscounsel.law
Kathryn Weidner – kweidner@rscounsel.law
Recent Investigations
DISCLAIMER
In our legal system, every person is innocent until and unless found guilty by a court of law or a tribunal. Whenever we reference “allegations” or charges that are “alleged,” such allegations or charges have not been proven, and are merely accusations, not findings of fault, as of the date of the blog. We do not have, nor do we undertake, a duty to continue to monitor or follow matters about which we report, and/or to publish subsequent updates regarding various developments that may occur in such matters. Readers are encouraged to conduct their own research regarding any such matters and any developments that may or may not have occurred in such matters. Also, the Brokercheck report linked to some of our blogs is the up-to-date version as of the date of accessing by the reader. The information in our blogs is current as of the date of the drafting of the blog, and given that sometimes certain past complaints may no longer be listed in newer Brokercheck reports, some of the events referenced in some of our blogs may later on be removed from newer Brokercheck reports. Visitors may check the most recent version of each brokercheck report at www.finra.org, and may contact FINRA for the earlier version of the Brokercheck report upon which various blogs may be based.
