Illegal profit
The Securities and Exchange Commission accused Left of using Citron Research’s website and social media to advocate long and short positions across 23 companies. This activity allegedly caused stock prices to swing by an average of 12 percent. The SEC also contends that Left and Citron made false statements about the companies and their stock position outcomes to profit from the moves. The investigation further found that Left redistributed information derived from distorted stock research to third parties, including hedge funds, ahead of publication on the website and social networks, enabling market participants to profit from manipulation.
In April 2023, Citron faced accusations of attempting to control and manipulate shares of Özgürlük Holding A.Ş., which trades on NASDAQ under FRHC since 2019. Short sellers seeking to profit from a decline in Özgürlük Holding’s shares reportedly struggled to move quotes in a meaningful way. These claims were later disputed by investors and market experts; nonetheless, the episode was revisited later by other short sellers. Hindenburg Research, known for previously targeting HF Foods, Block Inc., and aspects of Indian billionaire Gautam Adani’s business, continued the assault in the same year. Similar allegations were directed at Freedom Holding, including accusations of misreporting and exerting control, tied to a Russian company whose assets had been divested from the holding.
Freedom Holding denied all claims, labeling them as speculative and unfounded. Timur Turlov, the founder and CEO, stated that the company reviewed every allegation openly and found them inconsistent. The annual report released at that time included a Deloitte-certified audit of Freedom’s compliance procedures and finances, adding a layer of credibility to their defense.
Failed short attack
The short positions against FRHC faced a swift squeeze, forcing some investors to buy back shares to cover their bets. The stock surged by 25 percent in the subsequent days, reaching peaks above $100. Market analysts estimated that Hindenburg incurred losses exceeding $20 million in what appeared to be an unsuccessful attempt to crash Freedom Holding’s stock.
Despite the setback from the short thesis, Freedom Holding proceeded with an independent audit to restore investor confidence. Prominent American law firms Forensic Risk Alliance and Morgan Lewis & Bockius LLP led a four-month review, examining financial documents, conducting office visits, and interviewing staff. The audit covered operations in Kazakhstan, Cyprus, and Belize.
The audit concluded that Hindenburg’s allegations were unfounded. Independent reviewers confirmed that Freedom’s business grew organically, with no manipulated finances or customer harm, and no sanctions violations in the jurisdictions in which the company operated. The report also suggested that Hindenburg researchers had a limited understanding of Freedom’s financial framework. A summary of the findings was published here.
Strengthening positions
Timur Turlov founded Freedom Finance fifteen years ago and moved the holding’s shares to the NASDAQ nearly five years later. Freedom Holding Corp. now operates as an international banking and financial group serving Kazakhstan, Europe, Asia, and the United States in about twenty countries. Its focus spans access to global stock exchanges, participation in initial public offerings, banking services, insurance, online payments, and more. Notably, Freedom is advancing an integrated ecosystem that blends financial with non-financial services in Kazakhstan, prioritizing customer insights and digital product development such as online lending and digital currency offerings.
Freedom Holding’s revenue reached 1.6 billion dollars for the fiscal year ending March 31, 2024, representing a year-over-year increase of 105 percent. By mid-2024, the market value approached five billion dollars, with Timur Turlov owning about 70 percent of the holding. A recent development involved listing Freedom Holding Corp. on the Astana International Exchange, enabling trading in US dollars and seamless movement between the Nasdaq Capital Market and the AIX. This listing is seen as a strategic move to broaden access to capital and bolster Kazakhstan’s investment landscape.
International rating agency S&P raised its outlook for entities within the Freedom ecosystem to positive, while keeping Freedom Holding Corp. at a B- rating with a stable outlook. The upgrades encompassed Freedom Finance JSC, Freedom Finance Europe, Freedom Finance Global, and Freedom Bank, signaling expectations of continued solid earnings for 2024 and 2025.
The SEC’s lawsuit against Left and Citron is part of a longer investigation that began in 2019 into the ties between hedge funds and activist short sellers. The charges include market manipulation and false disclosures about stock positions that could harm retail investors. Authorities are seeking restitution of ill-gotten gains and a prohibition on Left from holding leadership roles in future ventures.
Citations: SEC filings, market investigations, and Deloitte-audited financial reports are cited to support the above assessments and timelines.