In addition to the liquidation, Turkish authorities implemented measures to boost lira liquidity and ease specific capital and margin requirements. The SPK also filed criminal complaints regarding transactions in shares of Turkish companies Katilimevim, Gundogdu Gida, and Destek Finans. Prosecutors have widened their investigation following these complaints. Turkish media reported that five individuals detained in recent days appeared in court on Wednesday and were jailed pending trial. The justice ministry indicated that those facing charges are accused of violating Turkey’s capital markets law, membership in a criminal organization, and aggravated fraud committed by company executives or those acting on their behalf during commercial activities.
The crisis has extended beyond the financial sector into the political sphere. Former family minister and AKP deputy chair Fatma Betül Sayan Kaya announced late Saturday that she had requested to leave her leadership posts in President Recep Tayyip Erdoğan’s ruling Justice and Development Party (AKP). Erdoğan accepted her resignation on Sunday. Kaya stated that she believed it necessary to take political responsibility to ensure her office did not become a subject of public debate, allowing the investigation to proceed independently and without suspicion.
Allegations and Political Fallout
Kaya’s departure followed days of speculation regarding her alleged links to the crisis. Zeynel Emre, spokesperson for the New Party, alleged that Kaya purchased shares in shipbuilder Özata Denizcilik for 63.4 million lira and sold them in September for 1.34 billion lira, prior to the fund crisis spilling into the stock market. Emre also made separate allegations regarding trades by her husband, İlyas Kaya. However, neither Kaya nor her husband was named in the SPK bulletin concerning Özata share transactions, nor were they among the 11 individuals named in a criminal complaint filed by the SPK on Friday regarding those specific transactions. The SPK bulletin made no findings regarding the allegations made by Emre.
Investors have expressed concern over the timing and scope of the regulatory response. One investor, who requested anonymity, noted that there is a significant political dimension to the crisis, citing connections between fund owners and political figures. The investor questioned why authorities did not move earlier. Economist Timothy Ash called for a complete investigation into the crisis and the regulatory response, emphasizing the need to determine what went wrong and hold those responsible to account while enacting reforms.
AKP spokesman Ömer Çelik stated that the fight against wrongdoing would continue “without compromise.” He wrote on social media that any allegation would be investigated, all irregularities would be brought to light, and those who committed wrongdoing would be held accountable before the law. The Turkish justice ministry had no immediate comment on the latest court decisions regarding the detained individuals.
The crisis highlights vulnerabilities in Turkey’s investment fund market, where liquidity constraints during market downturns can lead to forced liquidations and broader financial instability. The scale of the affected assets, valued at $18 billion, represents a substantial portion of the domestic financial system. As the liquidation process proceeds, the focus turns to the judicial proceedings and potential reforms aimed at strengthening market oversight and investor protection.
