Turkish prosecutors have lifted asset restrictions on 45 companies and 19 investment funds swept into a widening capital-markets investigation, easing an immediate constraint on corporate transactions but leaving the central crisis unresolved. The decision does not halt the liquidation of 131 funds holding the savings of 455,758 investors, nor does it end inquiries into alleged manipulation of thinly traded shares. For international investors, the distinction is critical: Turkey has reduced the operational disruption facing dozens of legal entities while continuing a regulatory and criminal process that will test market transparency, investor protection and institutional credibility.
Restrictions Lifted, Investigation Continues
The Istanbul Chief Public Prosecutor’s Office removed the restrictions after receiving a new assessment from the Capital Markets Board, known by its Turkish initials SPK, according to state broadcaster TRT Haber. Measures against individual suspects remain in force, while prosecutors have instructed financial institutions to report unusual transfers, large cash withdrawals and transactions that could reduce the value of assets under investigation.
Earlier official accounts said prosecutors had sought restrictions covering 46 legal entities, 18 funds and 42 individuals. The subsequent announcement referred to measures being lifted from 45 companies and 19 funds. Turkish authorities had not published a full reconciliation of those categories as of September 28, making it unclear whether the numerical difference reflected reclassification, additions to the inquiry or separate procedural decisions.
The lifting of a precautionary measure should not be interpreted as an acquittal or a definitive regulatory clearance. It primarily means that the affected businesses and funds are no longer subject to the same restrictions on asset transfers and financial transactions. Investigators can still examine trading records, beneficial ownership, related-party relationships and the movement of money between funds, portfolio-management companies and listed businesses.
That distinction matters for counterparties. An operating company released from an asset restriction may again be able to complete payments, financing transactions or asset sales, but banks and potential investors may still apply enhanced due diligence while the broader investigation remains open. Contractual representations, change-of-control provisions and regulatory warranties will therefore remain material in any acquisition, joint venture or financing involving an entity connected to the inquiry.
The case also entered the political arena after Fatma Betül Sayan Kaya, a former family minister, resigned from her position as a deputy chair of President Recep Tayyip Erdoğan’s Justice and Development Party. Her departure followed opposition allegations concerning share sales before the market disruption. Kaya has rejected wrongdoing. The allegation has not been established by a final court judgment, but its political sensitivity increases scrutiny of how authorities investigate trading access and possible informational advantages.
How Concentrated Funds Became a Liquidity Problem
The crisis developed from the interaction of concentrated fund portfolios, limited free floats and redemption promises. According to the SPK, it had observed since the final quarter of 2025 that some funds, particularly hedge-style and money-market vehicles, were contributing to price movements in low-float shares that could not be explained by the companies’ underlying financial performance.
The Financial Stability Committee, chaired by Treasury and Finance Minister Mehmet Şimşek, discussed the issue on December 2, 2025. The SPK subsequently circulated draft changes to the Turkish Capital Markets Association on February 13, 2026. On July 23, it revised valuation rules for exchange-traded real-estate and venture-capital investment fund units, requiring net asset value rather than potentially distorted exchange prices to be used after July 31. A broader investment-fund guide followed on August 28.
Those changes forced fund managers to reconsider concentrated positions and liquidity buffers. The fundamental problem was a mismatch between assets and liabilities. Fund investors expected to redeem units, but some underlying portfolios were dominated by shares for which there were few natural buyers. Selling enough stock to meet withdrawals could therefore drive prices sharply lower, reduce fund net asset values and prompt further redemptions.
Reuters reported that leading manager Pusula Portföy disclosed difficulty meeting redemption payments as selling accelerated. The SPK responded on September 17 by closing affected funds to transactions on TEFAS, Turkey’s electronic fund platform, and ordering the liquidation of 131 funds managed by seven portfolio-management companies. Reuters identified Tera Portföy, Pusula Portföy and Hedef Portföy among the managers involved.
The regulator later said Central Securities Depository records showed 455,758 unique investors in the funds. Şimşek put their reported assets at approximately $18.3 billion. That figure is the recorded value of assets, not a guarantee of recoveries. Actual proceeds will depend on market prices, asset quality, liquidity and any claims established during the investigation.
The scale is significant relative to Turkey’s fund industry. Central Securities Depository data showed mutual-fund assets of about $152.1 billion at the end of June 2025. Although the dates and valuation conditions are not directly comparable, the reported $18.3 billion under liquidation would equal roughly 12 percent of that earlier total.
Liquidation Rules Shift Losses Into a Longer Process
The SPK has extended one liquidation deadline from three months to six months, saying the additional time should allow assets to be sold under more appropriate market conditions. It emphasized that the process could finish earlier. The extension may reduce forced-sale discounts, but it also prolongs uncertainty for investors waiting for cash.
On September 28, the regulator clarified that every TEFAS instruction submitted on September 17 had been canceled, including orders placed before 1:30 p.m. Holders of canceled orders will instead receive their proportional share of the eventual liquidation balance. Orders submitted by September 16 that could not settle because a fund failed to meet its obligations or publish a price are also included in the liquidation process.
No official payment schedule or assurance of full repayment has been provided. This creates several layers of risk. Investors face valuation risk as illiquid securities are sold, timing risk during the extended process and legal risk if competing claims arise. Fund assets are legally segregated from a management company’s own property under Turkey’s Capital Markets Law, but segregation alone does not preserve value when underlying securities cannot be sold near their recorded prices.
The SPK says the reforms are intended to address unsecured related-party borrowing, artificial valuation and abnormal price formation. Article 107 of Capital Markets Law No. 6362 criminalizes transactions designed to create false or misleading impressions about the price, price movement, supply or demand of securities. The regulator says transaction-based manipulation can carry imprisonment of three to five years, alongside judicial fines.
The investigation will therefore turn on evidence of intent, coordination and economic substance. Concentration or poor liquidity management does not by itself prove manipulation. Prosecutors will need to distinguish between deficient risk controls, regulatory breaches and deliberate transactions intended to mislead the market.
Market Contagion Has Been Contained, Not Eliminated
Turkey’s BIST 100 index fell more than 8 percent during the week in which the liquidation measures were announced, according to Reuters. On September 28 it dropped as much as 3.44 percent before closing 2.38 percent lower at 12,592.76. Financial leasing and factoring shares recorded the largest sector decline, falling 8.73 percent, according to market data reported by Turkish Minute.
Authorities have taken steps to supply lira liquidity and ease certain capital and margin requirements. İşbank and state-controlled Ziraat Bank were appointed to oversee the liquidation, Reuters reported. Şimşek has argued that the fund closures should not create broader pressure on Borsa Istanbul because regulatory measures are designed to prevent contagion. Erdoğan similarly described the problem as confined to a limited part of the capital market.
There are reasons to separate this episode from a banking crisis. The stress originated in investment funds exposed to illiquid equities, rather than in deposit-taking institutions facing a solvency shock. Yet the episode can still affect the cost of capital. Foreign investors price not only systemic risk but also market accessibility, valuation reliability, disclosure quality and confidence that exit mechanisms will function during stress.
At the end of 2025, foreign investors held 36.22 percent of Turkish listed equities by value, according to the Central Securities Depository. Their holdings were worth approximately $63.6 billion. Even when foreign institutions have no exposure to the liquidated funds, a rise in perceived governance risk can increase required returns across listed companies or reduce willingness to participate in placements and initial public offerings.
The impact on foreign direct investment is less immediate because a factory, logistics operation or acquired subsidiary is not equivalent to a portfolio holding. Nevertheless, portfolio-market integrity affects how multinationals finance local operations, value acquisition targets and plan eventual exits.
Turkey’s FDI Recovery Faces a Governance Test
Turkey attracted $13.1 billion in foreign direct investment in 2025, a 12.2 percent annual increase, according to Central Bank data cited by the Presidency’s Investment and Finance Office. Wholesale and retail trade accounted for $3.05 billion, or 32 percent of sectoral inflows. Manufacturing followed with $3.02 billion, while information and communications attracted $1.31 billion.
The Investment and Finance Office says cumulative FDI reached approximately $288 billion between 2003 and 2025. Those figures reflect durable advantages, including Turkey’s industrial base, large domestic market, customs-union relationship with the European Union and position between European, Middle Eastern and Central Asian supply chains.
The fund crisis does not erase those fundamentals. It does, however, reinforce the importance of regulatory predictability and enforcement quality. Foreign investors assessing a Turkish acquisition may now place greater emphasis on whether a target’s shares were held by concentrated funds, whether historical market prices were supported by adequate free float, and whether related parties influenced valuation or financing.
Market entry analysis must therefore extend beyond demand projections and sector growth. It should include regulatory mapping, ownership analysis and an examination of how the proposed investment would interact with Turkey’s capital-market, banking and foreign-exchange rules.
Corporate structuring is equally relevant. Investors may need a locally incorporated subsidiary, carefully defined governance rights and ring-fenced financing arrangements to prevent unrelated market or shareholder disputes from disrupting operations. Legal and tax compliance reviews should cover beneficial ownership, related-party transactions, anti-money-laundering controls, disclosure obligations and the tax treatment of funding and asset transfers.
What This Means for Foreign Investors
The removal of restrictions from 45 companies and 19 funds is a stabilizing step, but it is not the conclusion of the case. Investors should monitor the liquidation timetable, court proceedings, SPK rule changes and any additional disclosures from portfolio managers and listed companies. They should also treat quoted fund values as provisional until assets have been sold and proceeds distributed.
For direct investors considering Turkey, immediate priorities include identifying whether a target, shareholder, lender or commercial counterparty appears in the investigation, confirming that assets can be transferred without restriction, and testing valuations against cash flow and comparable transactions rather than recent exchange prices alone.
This is where several advisory workstreams converge. Market-entry analysis should incorporate regulatory and counterparty risk. Company incorporation and corporate structuring can isolate operating assets and clarify governance. Investment-incentive applications should be verified independently of financing assumptions. Legal and tax compliance requires review of ownership, funding flows and reporting obligations. Government-relations and regulatory liaison can help investors obtain reliable interpretations as rules evolve, while import-export facilitation and project management can protect operational schedules if banking or counterparty checks slow payments and procurement.
Turkey’s response will ultimately be judged not only by how quickly the liquidations finish, but by whether authorities produce transparent findings, preserve due process and close the weaknesses that allowed liquidity and valuation risks to accumulate. For foreign investors, the opportunity remains substantial, but this episode shows that successful entry requires institution-level due diligence as well as confidence in the underlying business case.