Turkish committee backs interim payments for investors in 131 liquidated funds

A Turkish parliamentary committee approved a bill on 14 October that would allow interim payments of up to 1 million Turkish lira (TL) to eligible investors in funds being liquidated on the orders of the Capital Markets Board (SPK), according to Hurriyet Daily News. The nine-article proposal covers unfinished liquidations among 131 funds and still needs approval from the general assembly of parliament. Ersan Aksu, a ruling AK Party lawmaker and one of the bill's sponsors, said around 350,000 investors were expected to recover their net investment through interim payments while keeping their right to a final settlement.

How the liquidations began

On 17 September SPK's board, citing developments in Borsa Istanbul markets, closed to trading on the TEFAS fund platform all funds founded by seven portfolio managers, Tera, Pusula, Hedef, Atlas, A1, Pardus and Bulls, and ordered named funds liquidated by a method to be set by the board, according to SPK bulletin 2026/60. The same decision let brokers apply a minimum equity ratio of 20 per cent instead of 35 per cent to margin trading, as far as their own risk policies allowed, until the end of the session on 2 October. SPK later said 131 funds of the seven managers had been ordered liquidated and that central registry records show 455,758 unique investors in them, according to its statement of 23 September.

The liquidation rules in bulletin 2026/61 appointed Türkiye İş Bankası to run the Tera funds and Ziraat Bankası the funds of the other six managers. The banks sell fund assets and pass cash to investors in proportion to their holdings. The initial three-month limit on the process was extended to six months on 21 September, which SPK said was meant to allow assets to be sold on suitable terms and did not mean liquidation would take six months.

Interim payments and the bill

On 1 October SPK set an additional procedure for the funds of Tera, Pusula, Atlas and Hedef. Unit holders whose reconciliation is complete receive an interim payment, offset against their final entitlement and based on net investment amounts determined by the central registry, capped at TL1 million per investor per fund, with no units redeemed in return, according to the announcement. It applies first to money market funds. For the A1, Bulls and Pardus funds, SPK said liquidation would also start with money market funds, in descending order of investor numbers, in a separate announcement.

The Communications Directorate said on 13 October that 43,643 investors in funds managed by A1, Bulls and Pardus received TL6.4 billion the previous week, Hurriyet Daily News reported. Under the bill, interim payments would be calculated from actual cash deposits and withdrawals without inflation adjustment and deducted from the final amount. If cash is insufficient, SPK could prioritise investors with the smallest net investments or set a minimum payment for all eligible investors. Aksu said payments would come from fund assets and money recovered from those held responsible for losses, with no public funds used.

In an example Aksu gave to the committee, a fund holding TL1.5 million would pay in full investors with net investments of TL200,000 and TL800,000. An investor owed TL2 million would receive the remaining TL500,000, and one owed TL10 million would receive nothing in that round, according to the newspaper.

Enforcement and index-provider response

SPK said on 6 October that it imposed administrative fines of TL2.741 billion in 2025 and TL948 million in the first nine months of 2026, and filed criminal complaints against 152 people in 2025 and 174 so far in 2026, 96 of them over fund-related transactions, in a press statement. On 1 October it also opened accounts in the name of the Savings Deposit Insurance Fund where investors can voluntarily return what it called excessive gains, according to its announcement.

Deputy Treasury and Finance Minister İlhan Hatipoğlu told the committee that the Financial Crimes Investigation Board had made 48 requests to 29 countries for information on 278 individuals and legal entities, Hurriyet Daily News reported. Treasury and Finance Minister Mehmet Şimşek said on 16 October that legal changes against capital market crimes, including coordinated transactions by funds, are due by early 2027, according to the newspaper.

MSCI said it would freeze certain index changes for Turkish equities, including increases to foreign inclusion factors and additions to its Türkiye Investable Market Index. It cited concerns about possible coordinated trading through fund holdings closely affiliated with smaller listed companies, and said it would consider a consultation on reclassifying Türkiye to frontier or standalone status if progress is not evident by June 2027, Hurriyet Daily News reported on 16 October.