A vast Turkey stock scandal has rocked the nation’s financial markets. Approximately 455,000 investors now face significant losses. Authorities have launched an extensive investigation, leading to over 45 arrests and the high-profile resignation of a ruling party politician.
Turkish citizens frequently seek to protect their wealth from high inflation, currently around 30%. Many turn to stocks and mutual funds, hoping for strong returns. However, the stock market recently proved a perilous trap. In mid-September, the benchmark BIST 100 index plunged by 6% in one day, losing about 12% within a few trading days. This sharp decline stemmed from a major market manipulation scheme.
Allegations suggest some investment fund providers artificially inflated their fund values. These funds reportedly held “junk stocks” with little real worth. Firms like Pusula Portfoy and Tera were implicated. Two Tera funds alone managed assets totaling around €6.5 billion.
The Capital Markets Board (SPK) quickly responded, shutting down seven asset managers, including Tera, Pusula, and Atlas. A total of 131 funds are now scheduled for liquidation. Justice Minister Akin Gurlek confirmed over 45 arrests, including investment firm executives. Assets belonging to 42 individuals and 46 legal entities have also been frozen. The Istanbul Public Prosecutor’s Office is investigating charges of fraud and capital markets law violations.
The Istanbul Stock Exchange also took action, removing 27 stocks from the BIST 100 index. Nevertheless, uncertainty surrounds investors’ prospects of recovering their money. Funds will be liquidated, and proceeds distributed. The deadline was extended to six months to ease selling pressure. However, full recovery is not guaranteed; investment funds carry inherent risk, especially those with untradeable “junk stocks.”
Experts emphasize distinguishing market losses from manipulation damages. Economist Guldem Atabay noted investors bear market risk, but not false information or inflated prices. Financial advisor Aysel Gundogdu believes fund assets may not cover claims, suggesting structural failures. She proposes tapping fund founders’ and managers’ assets to cover shortfalls. Accountability for legal violations remains crucial, experts assert.
Politically, Fatma Betul Sayan Kaya, a prominent AKP deputy chair and former minister, resigned from all her positions. This followed allegations regarding her and her husband’s stock transactions linked to the crisis. She cited political responsibility, stating her position should not impede the investigation. The opposition plans a parliamentary inquiry to determine if other politicians were involved. The Turkey stock scandal continues to prompt widespread calls for greater oversight and transparency.
