Hall of Shame
UP Fintech Holding Limited (TIGR US)
UP Fintech Holdings Ltd is a China-based online brokerage firm. It offers an app and online trading platform that enables Chinese investors to trade equities and other financial instruments. These are on US stock markets, the Hong Kong exchanges, and multiple other exchanges in various countries.
It listed on the NASDAQ in March 2019 raising USD105M.
On October 16, 2019, Geoinversting published a report "UP Fintech Holding Ltd. – TIGR – is a U.S. Listed China Based Company Operating an Illegal Money Laundering Scheme" In summary, Geoinvesting said :-
- UP Fintech Holding Limited (NASDAQ:TIGR) is a US listed China-based online brokerage platform that has created an elaborate scheme to enable Chinese citizens to trade in foreign securities, bypassing regulation in China.
- TIGR is operating without the proper license(s) required for Chinese citizens to trade foreign securities and has already been subject to a government investigation by the China Securities Regulatory Commission (CSRC).
- We provide evidence that TIGR’s competitors have shut down their businesses, which we believe was a result of regulatory pressure. This evidence combined with our research on the Chinese regulatory environment suggests that TIGR’s brokerage platform could be shut down any day.
- China CLEARLY restricts its citizens from converting RMB to USD for investment purposes. Our investigator in China opened an account with TIGR and recorded conversations with customer service. Our investigator was instructed to make fraudulent claims to the local bank in China about the use of funds so that RMB could be exchanged for USD and deposited into TIGR’s overseas trading account.
- For the individual account holder, this is outright money laundering and nothing but illegal, and could even cause enforcement action against people who have opened brokerage accounts with TIGR. The fact that TIGR directs applicants to lie and break the law is enabling the applicant to perform money laundering. Furthermore, in our opinion, the fact that the platform facilitates this puts it at risk of violating anti-money laundering laws.
- The company seemingly used New Zealand licenses to book revenues from 2016 to 2018 that the company was unable to book from either U.S (where most execution and clearing of trades happens through Interactive Brokers Group, Inc. (NASDAQ:IBKR)) and China (where most of TIGR’s clients are located and where the company does not have the proper license(s) to provide brokerage services).
- The majority of TIGR’s revenue are generated from commission revenue through its relationship with Interactive Brokers, subjecting the company to significant risk due to the zero commission wars taking place in the U.S. brokerage sector.
- The company has made interest free loans to related parties including insiders, which we view as a red flag for corporate governance.
In conclusion Geoinvesting say :-
"We have uncovered a range of issues that we believe make TIGR uninvestible. We believe that we have proven that the company is conducting an illegal brokerage business, and in our opinion, essentially acting as an agent for Interactive Brokers to solicit money from Chinese citizens. TIGR acquiring overseas license is nothing but a charade to portray legitimacy to US investors and divert attention from the key issue that TIGR is not licensed to provide any kind of trading services in foreign securities to Chinese citizens.
Our analysis on the Chinese regulatory environment suggests that regulatory action could be imminent. Our recordings with TIGR’s customer service, where our investigator received instructions to lie to the domestic bank, strongly support our view that TIGR will be shut down soon.
The range of related issues we highlighted make TIGR seem unfit to be a publicly traded company in the US."
On Novmber 6, 2019, an investor in UP Fintech filed a lawsuit in the U.S. District Court over alleged violations of Federal Securities Laws. The investor claims that in the Offering, Up Fintech made false and/or misleading statements. That they failed to disclose that Fintech was experiencing a material decrease in commissions, because of a negative trend related to risk-averse investors in the market. That UP Fintech was unable to absorb costs associated with the rapid growth of its business and its status as a publicly listed company on a U.S. exchange. That UP Fintech was incurring significant additional expenses related to, inter alia, employee headcount and employee compensation and benefits. All of the foregoing had led to UP Fintech significantly increasing operating costs and expenses. As a result, the Offering Documents were materially false and/or misleading and failed to state information required to be stated therein, and the Company’s statements between March 20, 2019 and May 16, 2019 were likewise materially false and/or misleading.
Geoinvesting: UP Fintech is a U.S. Listed China Based Company Operating an Illegal Money Laundering Scheme, 16 Oct 2019
Shareholders Foundation: UP Fintech Holding - Investor Securities Class Action Lawsuit, 6 Nov 2019
UP Fintech: Unaudited Third Quarter 2019 Financial Results
UP Fintech: Prospectus