Beneath Türkiye’s Financial Markets, an $18 Billion Fund Crisis Exposes the Fragile Path of Investor Confidence

Türkiye’s financial markets entered a period of unusual turbulence in September as authorities investigated a group of investment funds whose combined assets were reported at around $18 billion. The developments have affected hundreds of thousands of investors and prompted a widening legal investigation.

According to Türkiye’s Capital Markets Board, more than 455,000 investors held interests in 131 funds involved in the investigation. Authorities moved to liquidate the funds as prosecutors examined allegations involving market manipulation and fraud.

The investigation expanded on September 23 with the arrest of Emre Tezmen, chairman of brokerage Tera Yatırım, along with board members Kerem Alkin and Emre Alkin, according to reports cited by the Financial Times. Other executives were also detained in connection with the investigation.

The scale of the case became clearer as authorities disclosed the number of affected funds and investors. The reported $18 billion figure refers to assets associated with the funds under investigation, rather than an established measure of money proven to have been lost through criminal activity.

Prosecutors are examining whether valuations of some illiquid shares were artificially inflated. Several funds reportedly held significant positions in thinly traded companies, making it difficult to meet redemption requests without putting additional pressure on share prices.

The episode intensified after new capital-market rules were introduced in late August. Subsequent withdrawals from some funds placed pressure on portfolios, while difficulties selling less-liquid holdings contributed to sharp movements in Turkish equities during the middle of September.

Authorities have also imposed and later adjusted asset restrictions during the investigation. On September 28, prosecutors lifted restrictions on 45 companies and 19 funds after a further assessment, while measures against individuals remained in place.

For ordinary investors, the situation illustrates how market liquidity can become important when many participants seek to withdraw funds at the same time. A fund may appear large on paper, yet its ability to return cash quickly can depend heavily on the ease with which its underlying assets can be sold.

The investigation remains ongoing, and allegations surrounding specific individuals and transactions have not automatically established criminal responsibility. Authorities will need to determine which actions, if any, violated financial regulations or criminal law.

For Türkiye’s financial system, the immediate task is therefore both legal and practical: completing the investigation while determining how affected funds and investors will be handled. The numbers involved make the process significant, but the final picture will depend on the findings reached by regulators and prosecutors.

Image Disclaimer: The illustrations described below are conceptual visualizations created for editorial purposes and do not depict actual individuals, arrests or investment-fund transactions.

Sources: Financial Times; Euronews; Türkiye Capital Markets Board.