Turkey has appointed two of its largest banks, Is Bankasi and the state-run Ziraat Bankasi, to oversee the liquidation of 131 investment funds involved in a major market scandal that has affected around 300,000 investors. The affected funds hold an estimated $17 billion in assets spread across more than half a million accounts, according to regulatory authorities.
The move follows the collapse of what officials have described as a speculative bubble that inflated the value of certain funds through concentrated holdings and coordinated trading in related companies. This activity artificially boosted share prices and fund valuations, attracting new investors with the promise of high returns. The scheme unraveled when Pusula Portföy, a leading Istanbul-based fund manager, disclosed that some of its funds could not meet redemption requests on time, prompting a rush by investors to withdraw savings across multiple funds.
Finance Minister Mehmet Şimşek stated in a recent television interview that the affected funds represent approximately 10 percent of Turkey’s investment fund sector and that authorities have effectively "quarantined" the troubled segment to prevent systemic risks. He added that the remaining 90 percent of the fund market continues to operate normally. The liquidation process is expected to take up to three months.
In response to the crisis, Turkey’s central bank provided liquidity support to banks to prevent forced asset sales that could have triggered a stock market crash. Additionally, a state-owned Islamic bank has started negotiations to acquire two savings companies affiliated with the fund management group at the center of the scandal.
Law enforcement has taken action against those involved: four suspects, including a fund board chair and members, remain in custody pending trial, while 51 individuals face travel bans and asset freezes. The Capital Markets Board (CMB) acknowledged concerns about inflated fund valuations and is pursuing legal measures against those alleged to have orchestrated the scheme, describing it as “Ponzi-like” with illicit gains obtained through misleading investors.
Market experts have been cautious but not alarmist about the broader implications. Timothy Ash, senior emerging market strategist at RBC BlueBay, indicated that while the crisis is not yet systemic, authorities must act decisively and implement comprehensive regulatory reforms to restore confidence in the Turkish equities market.
Turkey’s benchmark BIST 100 index fell 1.7 percent in the wake of the unfolding events, marking its poorest weekly performance since March 2025, when the market was roiled by the detention of Istanbul’s mayor, Ekrem İmamoğlu. Earlier warnings from the index provider MSCI about “co-ordinated trading behaviour” contributing to distorted stock prices had underscored underlying vulnerabilities in the market.
The Capital Markets Board has noted that it identified suspicious trading patterns as early as late 2025, when some funds were causing share price movements unsupported by economic fundamentals or company performance. Şimşek acknowledged in November that the government was aware of manipulation taking place but had been preparing a response that has now entered an active phase. The ongoing liquidation and legal proceedings represent part of a broader effort to strengthen market oversight and protect investors in Turkey’s capital markets.