RELATED PARTY TRANSACTIONS |
9 Months Ended |
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Dec. 31, 2022 | |
| Related Party Transactions [Abstract] | |
| RELATED PARTY TRANSACTIONS | RELATED PARTY TRANSACTIONS During the three and nine months ended December 31, 2022 and 2021, the Company engaged in various related party transactions, a substantial amount of which were conducted with Freedom Securities Trading Inc. (formerly known as FFIN Brokerage Services, Inc.) (“FFIN Brokerage”), a Belize company which is owned personally by the Company’s chief executive officer, chairman and majority shareholder, Timur Turlov, and is not part of the FRHC group of companies. FFIN Brokerage has its own brokerage customers, which include individuals and market-maker institutions and conducts business with the Company through a client omnibus account at Freedom EU.
Fee and commission income earned from related parties is comprised primarily of brokerage commissions and commissions for money transfers by brokerage clients, principally FFIN Brokerage. Fee and commission income earned from FFIN Brokerage principally consists of fees and commissions paid by FFIN Brokerage to Freedom EU to execute trades requested by brokerage customers of FFIN Brokerage, as well as commissions paid by FFIN Brokerage for order flow, which is net compensation received from firms to which our broker-dealer subsidiaries send equity and options orders, and fees for outstanding short sale positions. During the three months ended December 31, 2022 and 2021, the Company earned fee and commission income from related parties in the amounts of $44,590 and $80,024, respectively. Fee and commission income generated from FFIN Brokerage accounted for approximately 98% of the Company's total related party fee and commission income for the three months ended December 31, 2022, as compared to approximately 94% of the Company's total related party fee and commission income for the three months ended December 31, 2021. During the nine months ended December 31, 2022 and 2021, the Company earned fee and commission income from related parties in the amounts of $181,396 and $230,026, respectively. Fee and commission income generated from FFIN Brokerage accounted for approximately 93% and 96% of the Company's total related party fee and commission income for the nine months ended December 31, 2022 and 2021, respectively.
Interest income earned from related parties is comprised entirely of interest income from FFIN Brokerage, principally interest income from margin lending. During the three months ended December 31, 2022 and 2021, the Company earned interest income from related parties in the amounts of $10,796 and $3,807, respectively. Interest income generated from FFIN Brokerage accounted for approximately 100% of the Company's total related party interest income for each of the three months ended December 31, 2022, and the three months ended December 31, 2021. During the nine months ended December 31, 2022 and 2021, the Company earned interest income from related parties in the amounts of 21,659 and $4,221, respectively. Interest income generated from FFIN Brokerage accounted for approximately 100% of the Company's total related party interest income for each of the nine months ended December 31, 2022 and 2021, respectively.
During the three months ended December 31, 2022 and 2021, the Company paid fee and commission expense for brokerage services to Wisdompoint Capital LTD and FFIN Brokerage in the amount of $2,304 and $3,823, respectively. During the nine months ended December 31, 2022 and 2021, the Company paid fee and commission expense for brokerage services to related parties in the amounts of $2,657 and $14,350, respectively.
During the three months ended December 31, 2022 and 2021, the Company recorded stock-based compensation expense for restricted stock grants to related parties in the amount of $345 and $385, respectively. During the nine months ended December 31, 2022, and 2021, the Company recorded stock-based compensation expense for restricted stock grants to related parties in the amount of $1,028 and $950, respectively.
Margin lending, brokerage and other receivables from related parties result principally from borrowings made under margin loans by related parties, principally FFIN Brokerage. As of December 31, 2022, and March 31, 2022, the Company had margin lending receivables with related parties totaling $161,139 and $107,649, respectively. 97% and 95% of these balances were due from FFIN Brokerage. Margin lending receivables from FFIN Brokerage principally represent margin loans granted by Freedom EU to FFIN Brokerage. As of December 31, 2022, and March 31, 2022, the Company had bank commission receivables and receivables from brokerage clients from related parties totaling $947 and $190, respectively.
As of December 31, 2022, and March 31, 2022, the Company had margin lending payables to related parties, totaling $4,507 and $38,889, respectively. 100% of these balances were due to Wisdompoint Capital LTD, as of December 31, 2022, and March 31, 2022, respectively. Wisdompoint Capital LTD (formerly Tradernet Limited) is a Cyprus company
related to Freedom EU through common management. Wisdompoint Capital LTD provides brokerage services to the Company.
As of December 31, 2022, and March 31, 2022, the Company had accounts payable to Timur Turlov totaling $271 and $313, respectively.
As of December 31, 2022, and March 31, 2022, the Company had amounts due to Timur Turlov related to the purchase price for the acquisition by the Company from Timur Turlov of two insurance companies, Freedom Life and Freedom Insurance, totaling $12,958 and $21,477, respectively. During the three months ended December 31, 2022 the Company paid the payable for acquisition of Freedom Life for $13,630. The payment of the consideration for Freedom Insurance is planned to be paid in February 2023.
As of December 31, 2022, and March 31, 2022, the Company had customer liabilities to related parties totaling $351,140 and $325,904, respectively. As of December 31, 2022, and March 31, 2022, 73% and 54%, respectively, of these balances were deposits from FFIN Brokerage held by Freedom EU related to brokerage services provided by Freedom EU to FFIN Brokerage.
As of December 31, 2022, and March 31, 2022, the Company had restricted customer cash deposited in current and brokerage accounts with related parties in the amounts of $127,211 and $222,651. As of December 31, 2022, and March 31, 2022, 19% and 78%, respectively, of these balances were from FFIN Brokerage.
During the the three and nine months ended December 31, 2022, the Company purchased loans in the aggregate amount of $50,594 and $89,935 and sold back loans totaling $12,977 and $32,904, respectively, to FFIN Credit, a company outside of the FRHC group which is owned by Timur Turlov.
As of December 31, 2022, and March 31, 2022 the Company had cash and cash equivalents held in brokerage accounts of related parties totaling $15,971 and $22,787 respectively. 100% of these balances were due to Wisdompoint Capital LTD.
In July 2021 the Company sold 23.88% of its outstanding equity interest in Freedom UA for $415 to Askar Tashtitov, the Company’s president, reducing the Company's direct ownership interest in Freedom UA to approximately 9%.
During the three months ended December 31, 2022 and 2021 Freedom Finance Technologies sold SPBX shares with a value of $832 and $1,912, respectively, to FFIN Brokerage.
Margin lending, brokerage and related banking services were provided to related parties pursuant to standard client account agreements and at standard market rates.
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