Turkey's Capital Markets Board Liquidates 131 Funds, 25 People Investigated, Total Involved Exceeds 890 Billion Lira, Approximately 18.3 Billion USD
The Capital Markets Board of Turkey (SPK) has frozen assets of several investment company executives and restricted some directors, authorized signatories, and their spouses and close relatives from transferring assets. This follows the inability of multiple funds managed by various companies to meet redemption requests. The regulatory authority has ordered the liquidation of a total of 131 funds under 7 companies, with 25 individuals entering judicial proceedings, including 15 detained and 10 on the run.
Nine companies are involved in the frozen assets and transactions, including Pusula Finans Holding and its securities company, Tera Yatirim and Tera Portfoy, Hedef Holding and its asset management company, Bulls Yatirim and its asset management company, as well as Ufuk Yatirim. The regulatory authorities require that transactions that may reduce the assets of board members, authorized signatories, and their spouses and close relatives must be reviewed and released by the prosecutor's office.
The total scale of the 131 funds involved exceeds 890 billion lira (approximately 18.3 billion USD). The Capital Markets Board has designated Turkey's two major banks, Ziraat Bank and Işbank, to supervise the liquidation process, which is expected to be completed within three months unless extended. As a result, Turkey's main stock index fell about 8% from the previous week's closing price but has since recovered somewhat.
The core of the incident points to an investigation into stock price manipulation of Katilimevim (a listed savings finance company). The Capital Markets Board has filed criminal charges against 38 individuals for stock manipulation involving three listed companies and imposed a two-year trading ban on related personnel. Finance Minister Mehmet Şimşek publicly stated that "there is no systemic risk," and the issues are limited to "credit and liquidity problems of a few funds," with affected assets accounting for about 10% to 11% of the total fund market size, while the remaining 90% continues to operate normally.
In terms of market mechanisms, the root of this crisis lies in some fund management companies previously creating book profits by holding related stocks and artificially inflating stock prices. Once market sentiment reversed and triggered concentrated redemptions, the funds could not meet redemption requests due to insufficient liquidity of holdings, forcing the regulatory authorities to intervene and take over the liquidation. This model is highly similar to the transmission path of previous liquidity crises in emerging market funds, reflecting the structural risks of some small and medium-sized asset management institutions overly relying on related party transactions to support high net worth in the absence of sufficient liquidity buffers.
Source: Public Information
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Turkey has previously experienced similar financial fraud scandals, including the 2021 case of Thodex founder fleeing with funds and the Sezgin Baran Korkmaz transnational money laundering case. Regulatory authorities have been continuously strengthening on-site inspections and stock price manipulation investigations of small and medium-sized asset management institutions in recent years. The companies involved, such as Tera, Hedef, Pusula, and Bulls, are all local small and medium-sized securities and asset management groups in Turkey, which have been repeatedly named in rumors of stock manipulation in the Turkish stock market.
The involved fund management companies likely maintained fund performance by holding related party stocks and artificially inflating book net values to attract continuous subscriptions, creating a "Ponzi-like" cycle of capital turnover. Once a market downturn triggered large-scale redemptions, the funds could not meet redemption requests due to insufficient liquidity of underlying assets and inflated valuations of related stocks, ultimately leading to regulatory authorities taking over the liquidation and utilizing state-owned banks for support. Essentially, this shifts the liquidity risk of private asset management failures to quasi-public resources.
This scenario is highly similar to the transmission path of the 2015 Chinese stock market crash caused by off-market financing and multiple collapses of "Ponzi-type" financial products in emerging markets—where regulatory weaknesses and insufficient information disclosure in small and medium-sized asset management institutions create false prosperity through related transactions during bull markets, leading to concentrated explosions during bear markets or liquidity tightening phases. The Turkish capital market is currently undergoing a transformation phase, facing continuous pressure on its currency and accelerating alignment of its regulatory system with international standards, and such clean-up and rectification are expected to continue.
This essentially represents a regulatory change— the combination of asset freezes, family member scrutiny, and state-owned bank custodial liquidation measures taken by Turkish regulatory authorities marks a shift from "post-event punishment" to a more proactive intervention model of "systematic inspection + preemptive freezing" in asset management industry regulation. Once this precedent becomes normalized, it will significantly increase the compliance costs for small and medium-sized asset management institutions engaging in related transactions and stock price manipulation, objectively benefiting the concentration of market share and investor trust towards larger institutions with state-owned backgrounds or more standardized governance structures.
ABAB News · Cognitive Law
The prosperity built on book net values is most afraid of someone wanting to redeem.
Once the regulator freezes family accounts, it indicates that the problem goes far beyond financial fraud.
The speed of crisis resolution often speaks more about the quality of regulation than the crisis itself.