Information Attacks On Freedom Holding Corp.: An Insight Recently, the multi-national financial services firm, Freedom Holding Corp., (NASDAQ: FRHC) found itself the target of a series of short seller disinformation campaigns designed to drive down the company's stock value, and achieve significant gains for the short seller.
By Sam Pinto
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Recently, the multi-national financial services firm, Freedom Holding Corp., (NASDAQ: FRHC) found itself the target of a series of short seller disinformation campaigns designed to drive down the company's stock value, and achieve significant gains for the short seller. After receiving word of the publication of a suspect short seller analyst report in August of this year, the company weighed its options and decided to take a proactive approach to dealing with the short seller's attempt to spread unsubstantiated rumors and other kinds of unverified negative news designed to help the short seller realize a profit on their short position.
Timur Turlov, Freedom Holding Corp.'s founder and Chief Executive Officer, has been active in getting his arms around the situation. He quickly took the opportunity to understand the genesis of this type of stock manipulation activity and discovered that financial market opportunists were the primary drivers behind the smear campaigns and that, "…their strategy begins with tarnishing the firm's image, often via multiple communication channels," as Turlov commented in a recent blog.
"It's a systematic process," Turlov stated, "Negative narratives about a company are initiated and propelled by public relations agencies, often using news portals, Telegram channels and niche media sources. Here, unverified and false claims are disseminated, painting the company in a bad light. Sometimes the services of a journalist, specializing in disparaging hit pieces, are enlisted to add a veneer of credibility."
Turlov further elaborated on another tactic: flooding regulatory bodies with complaints. A common practice among short sellers is to swamp Western regulatory bodies with complaints, calling into question a company's operations, and demanding reviews. And while accusations are usually meritless, the objective of the short seller isn't necessarily to incite action but to create an environment of suspicion.
However, Turlov remains optimistic about the integrity of the regulatory review process in democratic nations, where review decisions are grounded in facts rather than hearsay. Nevertheless, engaging an astute legal team is paramount in navigating these challenges, he has learned.
He has also learned of the importance of authenticity and ongoing transparency when dealing with the investing public and that having a long-term vision when building a business is critical. "Rather than succumbing to short-term, short selling tactics, businesses should fortify their operations with factual integrity, a skilled team, trustworthy partnerships, and the kind of continuous disclosure practices adopted in democratized countries that gives investors the tools they need to see through fake news and make smart decisions about the quality of a company," Turlov concluded.
As a reminder, Freedom Holding Corp. offers trading access across various global exchanges, including Kazakhstan's KASE, AIX, NYSE, NASDAQ, CBOE, CME, AMEX, LSE and Euronext.
