Here’s The Story Of The Billionaire Founder Behind Hindenburg Research’s Latest Short Selling Target

The short seller Hindenburg has accused Kazakhstan-based brokerage Freedom Holding of fraudulent practices. Former employees who spoke with Forbes have their own beef with the company.

The short seller Hindenburg Research published its latest report on Tuesday, accusing Freedom Holding Corp., a Nasdaq-listed financial services company headquartered in Kazakhstan, of a litany of fraudulent and illegal activity.

One thing Hindenburg didn’t mention: the founder of Freedom Holding, Timur Turlov, 35, has been on Forbes’ billionaires list since 2021, worth an estimated $3.2 billion as of Tuesday’s market close, down more than $100 million in a day. In 2021, Forbes highlighted the seemingly inexplicable runup in Freedom Holdings share price and some concerning issues about the way part of the brokerage was set up.

According to Hindenburg Research, Freedom Finance, the company’s stock brokerage, has allegedly been evading U.S. and European sanctions since Russia’s invasion of Ukraine by continuing to offer its services to Russia-based customers, including clients of firms targeted specifically for sanctions enforcement measures. (The company admitted to providing “brokerage services to certain individuals and entities who are subject to sanctions” in its annual report earlier this month.)

Hindenburg Research also accuses Freedom Holding Corp. of “fabricating revenue,” of manipulating its own stock price, and of commingling customer funds. “All told, Freedom Holding has exhibited a startling array of red flags relating to virtually every category of financial malfeasance worthy of investigation,” writes Hindenburg Research, which has entered a short position on the company’s stock.

The company’s shares closed Tuesday’s market down 3.2%, leaving it with a market capitalization of nearly $4.4 billion. Turlov owns over 70% of the stock, which means the company’s shares prices are less susceptible to general investor sentiment.

“The allegations in the Hindenburg report are without merit,” a company spokesperson told Forbes in an emailed statement. “Freedom Holding and its subsidiaries continue to provide all required disclosures to regulators and investors, who can review our recently filed form 10-K and and [sic] audited financial statements on our website.”

Freedom Holding Corp., as those who’ve followed it well know, has had its share of challenges in the past year. The company’s previous auditors, a small Utah-based firm called WSRP LLC, was sanctioned last December by the Public Company Accounting Oversight Board for failing to “inquire about the business purpose of…related party transactions.” Freedom also had to restate its 2022 earnings and three different quarterly reports (the fourth quarter of 2021, as well as Q2 and Q3 of last year). Nasdaq has been threatening to delist the company since June 15 this year.

When Forbes first reported on Freedom over two years ago, the company’s meteoric stock market gains had vaulted its founder and CEO Turlov, a Russian-born millennial fond of wearing black turtlenecks and speaking with the U.S. press, into the billionaire ranks. The company, which had previously traded over-the-counter in the U.S., listed on the Nasdaq in October 2019. As Turlov told Forbes in a two-hour interview from his home in Almaty, Kazakhstan: “I had become determined to become a public company that would be good enough to be traded on [U.S. exchanges.] Because that’s the top of this business.”

In recent weeks, former Freedom Finance employees and analysts have spoken to Forbes about their impressions of and experiences working at Freedom Finance. Some corroborated claims recently made by Hindenburg Research, while others have brought fresh revelations on the firm’s working culture and toxic environment.

“They came in like cowboys, wild cowboys,” a former Freedom executive working in Dubai told Forbes a few weeks ago. “They were primarily looking for black funds, dark funds, unreported funds, to siphon them off into stock markets like they’d previously done very successfully in Russia” added the individual, who asked to remain anonymous in order to speak openly. “Once you go into unreported funds, that could be anything, especially in a market like Dubai. It could be terrorist money, it could be criminal syndicate money. It’s all kind of mixed up.”

This same employee also says that Freedom stiffed him out of money he was owed. “They would say, ‘As soon as the license is in place, we’ll be able to open our bank accounts in Dubai and you’ll get what is owed by us,’” the employee recalls. “They paid me a total of about $5,000 in six months whereas they were supposed to give me about [that much] a month,” added the employee, whose employment contract Forbes reviewed. “They still owe me salary for like eight months.”

A second former Freedom Finance employee who worked in the company’s Cyprus office, which employs about 300 people, did not have any insight or knowledge of the company’s allegedly dubious financials or Know Your Customer (KYC) requirements, but had plenty to say about a toxic work environment.

“I was abused many times by my management and gasli[t] and it was very, very difficult for me to go on,” says the former employee, who worked in finance and says he received double the amount of work that his colleagues did, yet was belittled by his managers. “They wanted to prove to me that I’m the worst one; that I’m not worth working there,” recalls the employee, who left after six months. “It was a terrible experience.”

Other employees had a better time at the company. “I will tell you, it was one of the nicest places that I’ve worked,” says a former senior executive who worked in the Cyprus office. “The nicest people.” Did they sense that anything was off about the company? Absolutely not: “It was straightforward. I didn’t see anything strange,” the person added. “I’m quite a skeptical person, but no, everything was good. Everything was good.”

Perhaps, however, a grain of salt or two are warranted. Since leaving Freedom Finance, this individual (who asked that Forbes not use his name) has worked for the equity market investment arm of Alfa Bank, Russia’s largest private bank, which has been sanctioned by the EU and the US. Alfa Bank is cited extensively in Hindenburg’s report; Freedom “continues to publicly offer clients ways to circumvent sanctions through Alfa Bank,” Hindenburg says.

A spokesperson for Freedom Holding has not yet replied regarding comments from former employees.

Turlov got his start in finance nearly two decades ago. In 2003, at age 16, he applied to a Moscow trading firm as a part-time junior trader, before moving to another bank two years later with the goal of investing in U.S. markets, he told Forbes in 2021. When the great recession hit and Turlov lost his job, he and about a half dozen of his fellow traders started a new company that would become Freedom, Turlov told Forbes.

The group set up shop in Almaty, Kazakhstan, and from there, expanded the business to other Eastern European countries. Turlov’s entree to U.S. markets came in 2015, when the company completed a reverse merger with Bmb Munai, a Nevada-incorporated company that formerly owned Kazakh oil and gas assets. Bmb President Askar Tashtitov stayed on as Freedom’s president.

For Turlov, Freedom’s 2019 IPO was a dream come true. “Never in my first days of my career would [I have been] able to expect that we will become a stock trading a million shares in a day,” he told Forbes.

But being a public company has exposed Freedom Finance’s curious design to investors. One of its most head-scratching features: the Belize-based brokerage firm, FFIN Belize, a third-party entity that routes all U.S. stock trades by Freedom customers, and which is wholly owned by Timur Turlov himself. In 2021, Turlov explained away the offshore connection as stemming from a regulatory hangup in Kazakhstan. In reality, Hindenburg claims, citing former company executives, FFIN Belize has been used to “funnel money out of Russia, often in cash, with no regard for KYC and AML [anti-money laundering] protocols.”

Another curiosity of Freedom involves one of its chief selling points to international customers—the firm’s supposed access to hot U.S. IPO stocks. The secret, Freedom told Bloomberg and others, was an unidentified hedge fund that bought shares directly from stock IPO underwriters, and then passed along the stock to Freedom via its Belize affiliate to the firm’s customers.

But that hedge fund may not exist at all, Hindenburg reports, citing individuals from the company. Jay Ritter, a professor at the University of Washington, is also skeptical about the existence of this investment vehicle. “Allocations to hedge funds aren’t being hidden. There aren’t pre-IPO investments. It’s all done transparently, it’s above the table,” Ritter, who researches IPOs, told Forbes a few weeks ago. “I find it very fishy.”

With additional reporting by Lisette Voytko.

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Adani Enterprises’ Failed Share Offering Exposes More Investment Funds With Questionable Ties To The Adani Group

Three investment funds that purchased shares in Adani Enterprises’ scuttled $2.5 billion offering have ties to the Adani Group and suspected Adani proxies, according to a Forbes analysis

Three investment funds with ties to the Adani Group committed to buying up shares as investors in Adani Enterprises follow-on stock offering, which was abruptly canceled Wednesday following a drop in Adani Enterprises’ share price in the wake of U.S. short seller Hindenburg Research’s 100-page report.

Two Mauritius-based funds, Ayushmat Ltd and Elm Park Fund, and India-based Aviator Global Investment Fund, together agreed to buy 9.24% of all shares available to anchor investors, the institutional investors who are allotted shares a day before the public offering. That percentage represented an investment of just $66 million, but is likely more evidence of Adani getting help from affiliated parties.

The three funds’ ties to Adani have not previously been reported, and follow Forbes’ report Wednesday that two of Adani Enterprises’ book-runners, Elara Capital and Monarch Networth Capital, were alleged to be Adani affiliates by Hindenburg.

The Adani Group’s seven publicly listed companies have lost over $100 billion of market value in the ten days since Hindenburg accused it of a decades-long scheme of fraudulent self enrichment. The group issued a lengthy denial and reply to Hindenburg’s report and has threatened legal action against the investment firm. The Adani Group did not respond to Forbes’ request for comment for this article.

Demand for Adani Enterprises’ $2.5 billion stock offering slumped after the short seller’s report. Despite Abu Dhabi’s last-minute injection of $400 million, the Adani Group called off the sale and said it will return funds to investors, with Gautam Adani himself citing in a video the “volatility of the market” and adding that it would not have been “morally correct” to go ahead under the circumstances. (He did not address the Hindenburg allegations.) Adani Enterprises stock has fallen more than 50% since January 24, the day before the Hindenburg report was published.

One of Adani Enterprises’ would-be anchor investors was Ayushmat Ltd, a Mauritius-based fund that had pledged to buy 2.32% of the shares offered early to the institutional investors. Ayushmat is administered by Rogers Capital, a financial services firm in Mauritius. One of Rogers’ directors and key shareholders is Jayechund Jingree, who was formerly a director of the Mauritius-headquartered Adani Global Ltd., a subsidiary of Adani Enterprises.

Jingree also has ties to Vinod Adani, Gautam’s brother and a key player in the Adani Group’s web of offshore companies. As described by Hindenburg, Jingree’s longtime U.K. brokerage, Orbit Investment Securities, was formerly named Jermyn Capital and controlled by Dharmesh Doshi, a former Indian fugitive in connection to a stock rigging scam in 2001, for which his partner, Ketan Parekh, was convicted. Doshi and Jermyn Capital were alleged to have participated in another stock rigging scam involving Indian drugmaker Sun Pharmaceuticals between 2007 and 2009 (Sun’s founder, Dilip Shanghvi, is one of India’s richest, worth $16 billion). That scheme also allegedly involved Jineshwar Holdings, a Mauritius company later revealed by offshore data leaks to be controlled by Vinod Adani.

Vikram Rege, a director at Ayushmat Ltd., said in an emailed statement to Forbes, “Ayushmat Ltd. does not manage any funds on behalf of any Adani Group principals.” Jingree did not respond to a request for comment.

Rege is also a director at Elm Park Fund, which had planned to be the second largest investor (5.67%) in Adani Enterprises’ anchor offering. Elm Park Fund, a Mauritius-based fund, was also alleged to have engaged in the Sun Pharma stock rigging scheme, according to a whistleblower complaint obtained by Moneylife India in 2018. Elm Park Fund was one of a “host of foreign entities involved in questionable transactions in the Indian equity market” as part of the scheme, according to Moneylife India. Forbes could not locate the full complaint; the Securities and Exchange Board of India previously declined to share it.

Rege did not address Forbes’ questions about Elm Park Fund, and the fund did not respond to Forbes’ requests for comment as of press time.

Lastly, Aviator Global Investment Fund subscribed to 1.25% of Adani Enterprises’ anchor shares. The Aviator Global Investment Fund’s senior management official, per 2021 Indian parliamentary records, is Antonino Sardegno. According to Sardegno’s LinkedIn profile (which disappeared within hours after Forbes reached out to him for comment), he led “investment solutions” from 2008 to 2013 for Monterosa Group. In its report, Hindenburg alleged that Monterosa Group and five of its investment funds, holding $4.5 billion of Adani company stock (as of January 24), was Adani’s largest “stock parking entity,” meaning, a third-party fund designed to conceal ownership.

More recently, Sardegno was CEO of Andetta Private Services from 2013 until August 2022. Andetta, which Hindenburg identified as a subsidiary of offshore firm Amicorp, is the controlling shareholder of New Leaina Investments, a Cyprus fund that previously owned over 1% of Adani Green Energy, Adani’s renewable energy company, and smaller stakes in other Adani companies, according to Hindenburg’s research and the Adani Group’s financial disclosures of foreign investors. Hindenburg alleges that Amicorp “formed at least 7 Adani promoter entities, at least 17 offshore shells and entities associated with Vinod Adani, and at least 3 Mauritius-based offshore shareholders of Adani stock.” Sardegno, Andetta Private Services and Amicorp have not responded to Forbes’ requests for comment as of press time.

If Adani Group principals are the ultimate beneficial owners of these various funds, that would mean the Adani Group is also a large stakeholder in one of the Adani Group’s rivals: the Hinduja Group, the $70 billion (annual sales) Indian conglomerate controlled by the four Hinduja brothers. The Aviator Global Investment Fund, New Leaina Investments and three other funds with ties to Adani Group – Elara India Opportunities Fund, Connecor Investment Enterprise Ltd and LGOF Global Opportunities Limited – all hold sizeable stakes in Hinduja Global Solutions, Hinduja Leyland Finance and Hinduja’s Gulf Oil Corp Limited. The Hinduja Group had not responded to a request for comment as of press time.

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