Turkey Detains 26 in Fund Scandal Probe, Minister Says All Profiteers Identified

Police on Wednesday detained 26 people, among them a former Finance Ministry official and executives from five portfolio management firms, in a widening probe into market manipulation that has rattled Turkey’s financial system. Prosecutors are investigating allegations affecting the savings of about 455,000 individual investors, according to a statement carried by Turkish media.

The detentions are part of a scandal that erupted in mid-September when several investment funds could not meet withdrawal requests. Regulators have since ordered the liquidation of 131 funds managed by seven companies, with assets reportedly worth about $17 billion.

Prosecutors had ordered the detention of 31 people; five remain at large. Among those still sought is Nusret Altınbaş, owner of privately held Altınbaş Holding, whose brother is already in custody, Turkish media reported. The suspects include 16 executives and employees from portfolio management firms Atlas, Pardus, Hedef, Tera and A1.

### Minister: All Profiteers Identified

Finance Minister Mehmet Şimşek said Tuesday that authorities have identified everyone who profited from the market-disrupting activities. “Everyone who profited from market-disrupting activities has been identified,” Şimşek told Habertürk and Bloomberg HT, without naming individuals or providing a total.

Recovery efforts will begin with those who made inflation-adjusted gains of at least 10 million lira ($202,000). If the money is not returned voluntarily, the Justice Ministry will initiate legal proceedings. “Those who colluded will be pursued through their personal assets,” Şimşek said.

So far, 85 people have been jailed pending trial in connection with the scandal, a figure the Justice Ministry reported on October 4 and has not updated since. Turkey’s “effective remorse” provisions allow those responsible for certain market manipulation offenses to avoid or reduce punishment by paying the Treasury at least twice the gains obtained.

### Political Fallout and Resignations

The crisis has raised uncomfortable questions about political connections and regulatory oversight, putting pressure on President Recep Tayyip Erdoğan’s ruling Justice and Development Party (AKP). Erdoğan on Wednesday pledged to bring those who profited from manipulation before the courts and accused critics of spreading misinformation, urging citizens to disregard “baseless rumors and ravings of those who are neck-deep in corruption.”

Former family minister Fatma Betül Sayan Kaya resigned from AKP leadership in September after allegations that she and her husband profited from stock transactions before the crisis broke. Both deny the allegations. Opposition parties have demanded a parliamentary inquiry, but the AKP and its nationalist ally, the MHP, have rejected the call.

The scandal has also claimed two senior regulatory officials. Capital Markets Board (SPK) Chairman Mahmut Sütcü submitted his resignation Monday citing health problems, and Erdoğan removed him by decree Tuesday after barely five months in office. Deputy Treasury and Finance Minister Osman Çelik requested retirement the same day, about two weeks after his son-in-law, İskender Balcı, was jailed pending trial in a related stock manipulation investigation. Balcı served on the board of shipbuilder Özata Denizcilik until August 31.

Separately, Sütcü’s predecessor, İbrahim Ömer Gönül, was removed from his subsequent post as head of the Public Oversight, Accounting and Auditing Standards Authority days after prosecutors received permission to investigate his conduct at the SPK.

Five journalists have also been detained over their coverage of the scandal, accused of spreading misinformation. Two were jailed pending trial over an image suggesting a link between the AKP’s spokesman and a key suspect.

### Liquidation and Investor Payments

Şimşek said 66 of the 131 funds have been completely liquidated, along with three portfolio management companies: A1 Capital, Pardus and Bulls. Payments totaling 40.8 billion lira ($823 million) have reached 45,747 accounts. Investors in stock-heavy funds received an average of 58% of their September 17 portfolio values, reflecting the decline in share prices.

A bill that cleared a parliamentary committee would permit interim payments of up to 1 million lira ($20,000) per eligible investor, depending on available assets. The payments would come from fund holdings and recovered money, not the Treasury. The bill still requires full legislative approval.

### MSCI Warning and Market Confidence

Last week, index provider MSCI expressed concerns over market transparency and “possible coordinated trading,” warning it could consider downgrading Turkey from emerging-market status if concrete improvements are not evident by June 2027. Şimşek said Turkey has already started addressing the issues identified by MSCI and that the grace period was “important.”

“Although the whole process was somewhat challenging … everyone with common sense says the Turkish capital markets will be much healthier,” Şimşek said.

Tuncer Bakirhan, co-chair of the pro-Kurdish DEM party, described the affair as “one of the biggest scams in history,” adding that “$20 billion is not a small amount of money.” Bakirhan said Turkey’s economy had been “turned into one of the world’s largest casinos.”

Şimşek pledged that Turkey would “significantly increase sanctions relating to manipulation and other market-disrupting actions” and strengthen supervision and oversight to address any legislative gaps.