Approximately 455,758 individual investors in Turkey are seeking to recover their money from 131 investment funds, collectively valued at around $18 billion, that were ordered into liquidation by the Capital Markets Board (CMB). This action followed a market selloff and a liquidity crunch where several funds, including those managed by Tera Portfoy and Pusula, struggled to meet investor withdrawal requests on September 15-16. The CMB initially set a three-month liquidation period, which has since been extended to six months to allow custodian banks, Is Bank and Ziraat Bank, more time to convert assets into cash and distribute proceeds proportionally to investors.
The crisis has expanded into a significant market manipulation investigation, leading to the arrest of Emre Tezmen, Chairman of Tera Yatirim Holding, and four other executives, including Emre Alkin, Kerem Alkin, Alper Ozturk, and Serdar Turhan. Authorities have also frozen assets linked to executives from several firms, including Tera Yatirim Menkul Degerler AS, Pusula Finans Holding AS, Hedef Holding, and Bulls Portföy. The investigation involves market-distorting activity and abnormal price movements in shares of Turkish companies like Katilimevim, Gundogdu Gida, and Destek Finans. Notably, Destek Finans Faktoring's shares had surged over 300% this year, at one point reaching a market capitalization of approximately $14.2 billion, close to that of Turkey's largest oil refiner, TUPRAS ($16.4 billion).
Prosecutors have initiated proceedings against 60 suspects, with 15 individuals detained and efforts underway to locate 10 more. Four suspects have been arrested and jailed pending trial, including Muhammed Yariz, chairman of Pusula Portfoy, and Altunc Kumova, chairman of Destek Holding. The rapid rise in the value of thinly traded shares held by some funds, which then attracted more investors, has led economists and analysts to compare the situation to a "Ponzi-like scheme," drawing parallels to Bernie Madoff's infamous fraud. The BIST-100 benchmark index of the Istanbul stock exchange fell more than 5% during the peak of the crisis, triggering a market-wide circuit breaker, though it rebounded by 2.6% after authorities announced support measures.
