Ukrainian regulator appoints temporary administrator at sanctions-hit Freedom Holding subsidiary
MOSCOW. June 13 (Interfax) - Ukraine's National Securities and Stock Market Commission (NSSMC) has appointed a temporary administrator at brokerage Freedom Finance Ukraine, a division of Freedom Holding Corp. that was hit by Ukrainian sanctions in October 2022.
The company will be temporarily managed by the head of Ukraine's National Association of Arbitration Managers, Alexander Bondarchuk, Ukrainian media reported, citing a press release from the regulator.
The NSSMC said its "key objective" is the "immediate resolution of the issue with the assets of Freedom Finance Ukraine's clients, which unfortunately have remained blocked in accounts for a fairly long time already."
The appointment of Bondarchuk is the first step in the process of resolving the situation with the broker's clients. However, all actions and tasks will be carried out strictly in line with the requirements of Ukraine's sanctions policy, the regulator said.
After sanctions were imposed, the funds and securities of clients in accounts with the broker were blocked, because there was no legal mechanism to return them. However, a parliamentary committee said the company is also to blame for the situation.
"This is the very sanctioned broker that the NSSMC fought for and to the committee meeting on which they did not come in full complement [...] The situation has reached such absurdity that deputies recently submitted a law to transfer this issue from the commission to the Deposit Guarantee Fund," a member of the Golos party in parliament, Yaroslav Zheleznyak said on Telegram.
He said 12,748 securities accounts of Freedom Finance Ukraine's clients have remained blocked for about two years already, 95% of them belong to individuals and the blocked assets in the company's accounts are worth a total of UAH3.5 billion.
He said 2,500 of the broker's clients invested in Ukrainian government military bonds. "And now the government has just abandoned them. And some officials are even still trying to preserve the company's license. Well, and the money of the company's owners, which should be nationalized," Zheleznyak said.
A Ukrainian presidential decree (No. 726/2022) was issued on October 19, 2022 to put into force a decision made by the country's National Security and Defense Council the same day to impose sanctions against almost 1,400 legal entities, including Freedom Finance Ukraine.
Two days later, the company said that the sanctions were a mistake, that Freedom Holding Corp. had sold its Russian assets due to Russia's military operation in Ukraine and that the Ukrainian company never had any business relations with it.
The head of the parliamentary finance, tax and customs policy committee, Daniil Getmantsev has repeatedly accused the NSSMC of dragging its feet in resolving the problems of Freedom Finance Ukraine's clients.
Freedom Finance Ukraine has said that its assets amounted to less than 0.3% of Freedom Holding's capital at the end of 2022.
The official exchange rate was UAH40.42/$1 on June 11.