Liquidity measures to continue amid Türkiye fund probe, Şimşek says

Legal proceedings against those involved in market-distorting transactions in the fund market are continuing, Treasury and Finance Minister Mehmet Şimşek said Monday, adding that liquidity measures needed to support financial stability would be maintained.

Authorities moved in quickly earlier this month to ensure market stability and launched investigations into suspected share-price manipulation in a number of thinly traded stocks that triggered heavy losses and redemption pressures at investment funds.

The government is protecting fund investors’ rights amid the turmoil, Şimşek said on the social media platform X, while stressing that investment, employment, production, and export capacity in the real sector remain a priority.

Almost half a million investors hold stakes in 131 investment funds that are said to be worth around $20 billion, which authorities ordered to be liquidated on Sept. 17.

Şimşek said the Treasury and Finance Ministry was coordinating with the Justice Ministry.

“Necessary measures will continue to be taken to prevent adverse effects on the financial system and the real economy. In this context, the liquidity required by the market will be provided,” he said.

The number of arrests in connection with the suspected stock manipulation has risen to 51, according to officials.

The problems emerged after Türkiye’s Capital Markets Board (SPK) changed its guidelines for investment funds, saying they could no longer invest all their assets in one stock but were required to diversify.

The move sought to address concerns that many funds were heavily investing in a small number of obscure or hard-to-sell stocks.

To comply, some funds began selling holdings, spooking investors who started trying to cash in their investments.

But a scandal erupted almost two weeks ago when several companies admitted they were unable to satisfy investor redemption demands.

President Recep Tayyip Erdoğan said last week there was no risk to either the financial system or the Turkish economy.

“All necessary steps are being taken within the framework of capital market regulations and the law. Whoever is responsible will be held accountable before the law,” Erdoğan told reporters.

Separately, Türkiye lifted asset-freeze orders imposed ⁠on 46 companies under the investigation, media reported Monday.

The Istanbul chief prosecutor’s office said in a statement the decision was taken following new assessments and notifications from the Capital Markets Board, NTV ⁠and other media reported.

Istanbul’s main BIST 100 index was down 2.7% Monday after a loss of 2.9% the previous week. The index has fallen back to levels last seen in early March.

The companies affected by the ⁠prosecutor’s statement ‌were among dozens ‌of legal entities, investment funds and individuals whose assets were frozen as ⁠investigators examined large stock market transactions carried out between July, ‌when the funds reached peak assets under management, and Sept. 16, the day before the SPK ordered the liquidation of the funds.

Justice Minister Akın Gürlek said last week investigators were scrutinizing large share ⁠purchases and sales during that period under the probe into alleged market manipulation.

Authorities had frozen the ⁠assets of 46 companies, 18 funds and 42 individuals and imposed overseas travel bans on 37 people.

At the weekend, a deputy chair of Türkiye’s ruling Justice and Development Party (AK Party) said she was stepping down so the claims could be “clarified” after allegations she had sold shares worth tens of millions of dollars shortly before the problems emerged.

“I have submitted my request to our party chairman to be excused from all positions and responsibilities I currently hold,” Fatma Betül Sayan Kaya wrote on X.

“I believe it’s necessary to take political responsibility to ensure the office I hold doesn’t become the subject of public debate and that investigation can be conducted independently, impartially, and without any suspicion or undue influence.”

AK Party spokesperson Ömer Çelik said Erdoğan had accepted Kaya’s resignation.

“We declare that all those who are involved in irregularities, corruption, abuse or anything that causes harm will be held accountable,” Çelik added.

DAILYSABAH