An Istanbul court on Saturday jailed 15 more suspects pending trial in the investigation into alleged manipulation in Türkiye’s capital markets, the latest step in a probe linked to the fund crisis that has frozen the savings of hundreds of thousands of investors.
According to the Anadolu Agency (AA), 22 suspects detained by Istanbul police were referred to the Çağlayan courthouse. The court ordered 15 of them to be held in custody pending trial and released the other seven under judicial control, a set of conditions that can include regular reporting to police and a travel ban. In Türkiye, "tutuklama" is detention pending trial by court order; it is not a conviction, and none of the suspects has been tried.
Four listed companies under scrutiny
The case is being handled by the Istanbul Chief Public Prosecutor’s Office bureau for terrorism financing and money laundering crimes, with the operations carried out by the Istanbul police financial crimes branch. AA said the investigation began after reports from the Capital Markets Board (SPK), Türkiye’s securities regulator, and written complaints prompted a review of trading in the shares of four companies listed on Borsa Istanbul: Işıklar Enerji ve Yapı Holding (IEYHO), Vişne Madencilik (VSNMD), Odine Solutions (ODINE) and Tera Finansal Yatırımlar Holding (TRHOL).
Prosecutors had issued detention orders for 31 people. In an earlier round this week, 11 suspects were jailed and four were ordered not to leave their homes, AA reported. According to the agency, the suspects include people who held positions at portfolio management companies, brokerage firms, a real estate company, a venture capital investment trust and banks, as well as company executives and board members. NTV reported that one of those jailed is a former general manager of a state-owned insurer, and that the allegations against him relate to deposits being channelled into funds now under liquidation. These are allegations by prosecutors, as reported, and have not been tested in court.
Background: funds in liquidation
The probe is tied to a wider crisis in Türkiye’s investment fund market. On 17 September, the SPK ordered the liquidation of 131 funds, a move that NTV said affected more than 455,000 investors. Funds managed under the Tera, Pusula and Atlas names are among those in extraordinary liquidation, according to NTV. Since then the regulator has been reducing the number of funds in liquidation and making cash and in-kind payouts, as we reported in our coverage of the SPK’s 40.8 billion lira in payments.
Parliament this week passed a law allowing interim payments of up to 1 million lira to investors; see our earlier report on Finance Minister Mehmet Şimşek’s refund and interim-payout plans.
What it means for investors
For foreign residents who hold Turkish mutual funds or shares through local banks and brokers, the arrests do not change payout procedures, which are run by the SPK and fund managers under the liquidation process. Investors in the affected funds should follow announcements from their bank or portfolio manager and the regulator. The turmoil has coincided with a run of weekly losses on Borsa Istanbul; for the central bank’s view, see our report on Governor Karahan’s remarks on tight policy and fund outflows. For a wider look at household budgets in Türkiye, see our cost of living guide.
Sources
- Sermaye piyasası işlemleri soruşturmalarında gözaltına alınan 15 zanlı tutuklandı (AA)
- Fon soruşturmasında 15 tutuklama daha (NTV)
Photo: Maxim Hopman / Unsplash License, via Unsplash
