The <a s Borsa Istanbul stock exchange to plummet last week.
Turkey’s justice minister stated on Wednesday that the government’s primary objective is to recover funds for nearly half a million <a s Capital Markets Board (SPK) placed all of these funds into liquidation, noting that they managed the capital of more than 455,000 individual investors.
“We’ve seen the savings of some citizens.. have been exploited and transferred elsewhere and smuggled abroad. Our goal is now to bring them back and ensure that our citizens get their money,” Justice Minister Akin Gurlek said in a YouTube interview in New York.
“Hopefully the grievances will be resolved in a short time.”
The situation began to unfold after the SPK issued new regulations on August 28, mandating that investment funds diversify their holdings rather than concentrating all assets in a single stock.
This policy change aimed to mitigate risks associated with funds that were heavily exposed to a small number of obscure or illiquid stocks.
In an effort to comply with the new rules, funds began offloading stocks, which alarmed investors and prompted a rush to withdraw their capital.
However, a scandal broke out last week when several firms acknowledged they could not liquidate assets quickly enough, leading to liquidity concerns that caused the Borsa Istanbul stock exchange to tumble.
“When investors started seeking withdrawals, a serious problem emerged: one or two funds effectively defaulted… (and) investors were unable to receive their money as expected. That triggered a degree of panic in the markets,” explained economist Murat Sagman.
“Unfortunately, an investor who placed 100 percent of their assets in these investments is likely to suffer very significant losses.”
Gurlek noted that prosecutors have “initiated proceedings against 63 individuals” regarding allegations of fraud, organized crime, defrauding the state, and violations of capital markets legislation.
In certain instances, stock valuations had been drastically inflated, he said, citing one firm without a registered headquarters whose “value is currently higher than Turkish Airlines and Aselsan”, Turkey’s largest defence electronics firm.
On Friday, <a s 2,038 investment funds.
