Turkey's stock market scandal impacts 455,000 investors; AKP politician resigns.

Investors in Turkey have been hit by a massive market‑manipulation scandal that has left about 455,000 people facing losses, led to more than 45 arrests and forced a senior Justice and Development Party (AKP) politician to quit. The turmoil erupted after the BIST 100 index fell 6 % in a single day in mid‑September and slid another 12 % over the next few sessions, prompting a swift police response and a wave of regulatory action.

The fallout comes at a time when Turkey is battling roughly 30 % annual inflation, driving many citizens into gold, foreign currency and high‑yield mutual funds to protect their savings. Some fund managers, notably Pusula Portfoy and Tera, struggled to meet redemption requests, exposing a deeper problem: the funds were allegedly inflating their values while holding largely worthless “junk” stocks. When the Capital Markets Board (SPK) stepped in, it shut down the funds of seven asset managers, including Tera, Pusula and Atlas, and announced the liquidation of 131 funds.

Prosecutors have charged the scheme with fraud, breaches of capital‑markets law and the formation of a criminal organization. Among those detained are senior executives from the implicated firms, and the assets of 42 individuals and 46 legal entities have been frozen. The Istanbul Stock Exchange has also removed 27 stocks from the BIST 100 benchmark as of 1 October. Liquidation of the affected funds will now take up to six months, a period extended to ease selling pressure and avoid fire‑sale prices, though some assets may be disposed of more quickly depending on market conditions.

The next steps will determine how much investors can recover. Frozen assets will be released as the courts approve sales, and proceeds will be distributed proportionally to fund shareholders. Analysts warn that money‑market funds are likely to be redeemed in full, but equity and hedge‑fund holdings tied to illiquid junk stocks may yield only partial returns. The scandal underscores the fragility of Turkey’s investment landscape and may prompt tighter oversight to restore confidence in the market.