A major stock market manipulation scandal in Turkey has led to the liquidation of 131 investment funds and the arrest of over 45 individuals.
Key facts
- •The BIST 100 index fell 6% in one day and 12% over several days in mid-September.
- •Seven asset managers, including Tera, Pusula, and Atlas, have had their funds shut down.
- •Two Tera funds alone held assets totaling approximately €6.5 billion.
- •Justice Minister Akin Gurlek announced that 45 people have been arrested.
- •The liquidation deadline for the 131 affected funds has been extended to six months.
A market manipulation scandal has affected approximately 455,000 investors in Turkey, triggering a sharp decline in the BIST 100 index. The Capital Markets Board has shut down seven asset management firms and ordered the liquidation of 131 funds. Authorities have arrested more than 45 people, including investment firm executives, amid allegations that funds were artificially inflated using worthless stocks.
By the numbers
Investigation and Legal Action
The Istanbul Public Prosecutor's Office is investigating charges of fraud, violations of capital markets law, and the formation of a criminal organization. Justice Minister Akin Gurlek confirmed that the assets of 42 individuals and 46 legal entities have been frozen. Additionally, the Istanbul Stock Exchange removed 27 stocks from the BIST 100 index effective October 1.
Political Consequences
The scandal has resulted in the resignation of Fatma Betul Sayan Kaya, a deputy chair of the ruling Justice and Development Party (AKP) and former minister of family affairs. She requested that President Recep Tayyip Erdogan relieve her of her posts following allegations regarding stock transactions involving her and her husband. Opposition lawmakers have announced plans to seek a parliamentary investigation into potential political involvement in the scandal.
Liquidation and Investor Recovery
The liquidation process involves selling fund assets to distribute proceeds to investors, with the deadline extended from three to six months to mitigate fire-sale risks. Financial experts warn that fund assets may not fully cover investor claims, as some portfolios contain untradeable 'junk stocks.' There is ongoing debate regarding whether the assets of fund founders and managers should be seized to address potential shortfalls.
Advertisement
This article was independently rewritten by ManyPress editorial AI from reporting originally published by Deutsche Welle Business.
