Investors in Turkey want one thing above all else: for their money to retain its value. Given inflation of around 30%, that is not exactly easy. As a result, many people are buying gold, foreign currency or stocks and increasingly, mutual fund shares that promise high returns.
But the stock market has become a trap for around half a million Turkish investors. In mid-September, the benchmark BIST 100 index plummeted by 6% in a single day and lost about 12% within just a few trading days. This sharp drop in stock prices was triggered by a major market manipulation scandal.
Approximately 455,000 investors have been affected, more than 45 people have been arrested and a high-ranking politician from the ruling Justice and Development Party (AKP) has resigned. Everything started when some investment fund providers had trouble making timely repayments to investors. Among those affected were funds managed by the companies Pusula Portfoy and Tera.
Two Tera funds alone held assets totaling around €6.5 billion ($6.37 billion). In response, the Capital Markets Board (SPK) intervened and shut down the funds of seven asset managers, including Tera, Pusula and Atlas. According to the state-run news agency Anadolu, a total of 131 funds are set to be liquidated.
The Istanbul Public Prosecutor's Office is now investigating charges of fraud, violations of the capital markets law and the formation of a criminal organization, Justice Minister Akin Gurlek announced. The suspicion: The fund companies are alleged to have artificially inflated the value of their funds, while in reality their funds contained worthless "junk stocks." Among the 45 people arrested so far are executives from investment firms. In addition, the assets of 42 individuals and 46 legal entities have been frozen, according to Gurlek on X.
The Istanbul Stock Exchange has also taken action: it excluded 27 stocks from the BIST 100 benchmark index as of October 1. The funds are being liquidated: Their assets will be sold and the proceeds distributed to investors in proportion to their fund shares. The deadline for this has been extended from three to six months.
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