Nearly 455,000 investors in Turkey are affected by a stock market manipulation scandal that has led to multiple arrests and the resignation of a high-ranking politician from the ruling Justice and Development Party (AKP). The scandal was triggered by a significant drop in the benchmark BIST 100 index, which fell by 6% in a single day and lost approximately 12% over several trading days in mid-September.
The crisis began when certain investment fund providers struggled to make timely repayments to investors, notably affecting funds managed by Pusula Portfoy and Tera, which together held assets totaling around €6.5 billion ($6.37 billion). In response, the Capital Markets Board (SPK) intervened, shutting down the funds of seven asset managers, including Tera and Pusula, with a total of 131 funds set to be liquidated.
The Istanbul Public Prosecutor's Office is investigating allegations of fraud, violations of capital markets law, and the formation of a criminal organization, as stated by Justice Minister Akin Gurlek. The fund companies are suspected of artificially inflating the value of their funds, which allegedly contained worthless 'junk stocks.' So far, over 45 individuals have been arrested, including executives from investment firms, and the assets of 42 individuals and 46 legal entities have been frozen.
The Istanbul Stock Exchange has excluded 27 stocks from the BIST 100 benchmark index as of October 1. The liquidation process for the affected funds will involve selling their assets and distributing the proceeds to investors based on their fund shares, with the deadline for liquidation extended from three to six months. Financial advisor Aysel Gundogdu noted that this extension aims to reduce selling pressure to avoid fire-sale prices, although the actual liquidation time may vary based on market conditions.
Economist Guldem Atabay highlighted the need to differentiate between market losses and damages from potential irregularities, emphasizing that investors should not have to accept false information or artificially inflated prices. Gundogdu expressed concerns that the fund's assets may not cover investors' claims, citing structural failures in management and oversight.
Atabay called for accountability from those responsible for the scandal, asserting that liquidation does not replace the need for legal accountability. The crisis has also led to the resignation of Fatma Betul Sayan Kaya, a deputy party chair and former minister of family affairs, amid allegations related to stock transactions involving her and her husband in connection with the fund crisis. She requested to be relieved of her posts to not hinder the investigation.
The opposition plans to bring the matter before Parliament, with Selcuk Ozdag, deputy leader of the Yeni Yol parliamentary group, announcing intentions to submit a motion for a parliamentary investigation into potential political involvement in the manipulation scandal.