Mutual Fund Liquidations and Manipulation Investigations in Turkey

While the liquidation process of over a hundred mutual funds affecting hundreds of thousands of investors continues in Turkey, the crisis is rooted in a mechanism where fund purchases drove up prices in stocks with low free floats, attracting new investors. Following the Capital Markets Board's new regulations, liquidity problems emerged and liquidation decisions were made.

Background of the Fund Crisis

While the liquidation process of 131 investment funds affecting more than 455,000 investors across Turkey continues, the amounts investors will receive back and the selling prices of the assets remain uncertain. At the center of the process is the rise in prices through fund purchases in stocks with low free floats, which attracted new investors.

The Capital Markets Board observed in the last quarter of 2025 that certain funds caused price movements in low-free-float stocks that were incompatible with economic reality. The regulations that came into effect on August 28 aimed to limit the opportunity for manipulation.

Market Fraud Investigations

The Capital Markets Board filed criminal complaints against 38 individuals for transaction-based market fraud due to transactions in the stocks of Katılımevim, Gündoğdu Gıda, and Destek Finans.

The Board also decided to impose a two-year trading ban on these individuals and Pusula Portföy.

Liquidity Pressure and Defaults

Following the entry into force of the new regulations, liquidity problems were experienced in some funds, and investors' withdrawal requests could not be met.

Pusula Portföy announced on September 15 that a default had occurred in participation share redemption payments, while Tera Portföy stated a day later that a similar situation had occurred in its Money Market Fund.

Liquidation Process and Officials' Statements

Following these developments, the Capital Markets Board decided on September 17 to liquidate 131 funds belonging to seven portfolio management companies. The liquidation period, initially envisioned as three months, was later extended to six months.

Minister of Treasury and Finance Mehmet Şimşek stated that the problems experienced were limited to a small number of funds and that they do not foresee a systemic risk in general.