Türkiye has extended the liquidation period of scores of investment funds at the center of a liquidity crunch that prompted authorities to intervene, while detaining more people and freezing assets linked to executives.
Authorities stepped in last week to shore up market stability after some investment funds defaulted on redemption requests, triggering a sharp selloff in Türkiye's benchmark stock index. The measures helped the index recover some of its losses.
As part of the intervention, the Capital Markets Board (SPK) mandated Ziraat Bank and Işbank to oversee the liquidation of 131 investment funds managed by seven portfolio management companies, including Tera Pörtfoy, Pusula Pörtfoy and Hedef Pörtfoy, on the TEFAS electronic fund trading platform.
Late Sunday, the SPK said it was extending the liquidation period given to the banks to six months from three months, "considering the portfolio structures of the funds subject to liquidation and market developments." It did not elaborate. The assets under management of liquidated funds have been said to exceed TL 890 billion ($18.3 billion).
An investigation into suspected share price manipulation has led to the detention of top executives from several firms and drawn scrutiny to concentrated bets in thinly traded stocks.
Treasury and Finance Minister Mehmet Şimşek said Friday the liquidation would not put pressure on Borsa Istanbul Stock Exchange because regulatory changes should prevent any contagion risk. He said authorities would continue to monitor the market closely.
On Saturday, the Justice Ministry said that Pusula Holding Chair Serdar Turhan, Tera Yatırım Holding Chair Emre Tezmen and three fund administrators had been detained as part of the investigation. It said four other suspects had already been arrested and all other suspects identified by the Capital Markets Board had been barred from leaving the country and had their assets frozen.
On Sunday, the ministry said it had identified a transfer of $15 million from Turhan's account to an account in Switzerland, and another transfer of $25 million from an account belonging to Muhammed Yarız, another executive at Pusula Pörtfoy Yönetim, which is linked with Pusula Holding.
The ministry added that Nihat Kırmızı, the chairman of the Doğa Sigorta firm, was also detained as part of the probe.
15 detained over Katılımevim shares
On Monday, Justice Minister Akin Gürlek said authorities detained 15 people in a probe into transactions involving shares of Katılımevim, a listed Turkish savings financing company that was founded by Pusula Holding's Turhan, while freezing assets linked to executives at several investment firms.
Prosecutors launched legal proceedings against 25 suspects in the Katılımevim investigation, Gürlek said in a statement. Ten suspects remained at large.
The SPK last week filed criminal complaints against 38 people over alleged manipulation of shares in Katılımevim and two other listed companies, and imposed two-year trading bans on them.
Authorities froze financial and asset transactions involving executives and officials linked to Pusula Finans Holding, Pusula Yatırım Menkul Değerler, Tera Yatırım Menkul Değerler, Tera Portföy Yönetimi, Hedef Holding, Hedef Portföy Yönetimi, Bulls Yatırım Menkul Değerler, Bulls Portföy Yönetimi and Ufuk Yatırım Yönetim ve Gayrimenkul, Gürlek said Monday.
The government has instructed banks, notaries, land registry authorities and financial crimes watchdog MASAK to prevent assets under investigation from being transferred or reduced, Gürlek said.
Authorities also ordered strict monitoring of transactions by board members, authorized signatories, their spouses and close relatives that could reduce their assets, requiring such transactions to be cleared by prosecutors.
The investigation was continuing, Gürlek said.
Tera says working to repay investors
Tera Pörtfoy said Sunday it had repaid some investors and was working to repay others, but that restrictions imposed by authorities were delaying the process.
"Redemption requests submitted during the period when inflows into our funds were being converted into investments surged within a short timeframe, evolving into a collective outflow demand totaling approximately 300 billion Turkish Lira" ($6.15 billion), Tera Pörtfoy said in a statement.
"It should be appreciated that meeting a demand of this magnitude within such a short period would not be easy for any financial institution," it said, adding that investors had been paid between September 16 and 18 but that further repayments were not possible "due to transaction restrictions and blocks."
It also said the firm was ready to cooperate with authorities to conclude the process as quickly as possible.