Former Istanbul Stock Exchange chief detained in probe involving 131 Turkish funds
Key Facts
A Turkish court on November 3, 2026, ordered the detention of Korkmaz Ergun, the former general manager of Borsa Istanbul, after prosecutors referred him for detention on a charge of receiving a bribe in an investigation into capital markets operations, Demirören News Agency reported. No conviction was handed down in the published proceedings, which concern the prosecutors’ request and the detention order. On the same day, Reuters reported that authorities had ordered six people detained, including a former deputy chairman of the Capital Markets Board, as part of an investigation into investment funds. The judicial action comes as the liquidation of funds covered by decisions of Turkey’s Capital Markets Board in September continues. The case has brought a former official in the market’s infrastructure into an investigation that has expanded to involve multiple people and funds.
The Capital Markets Board said its decisions issued on September 17 covered the liquidation of 131 funds managed by seven portfolio management companies. The funds had 455,758 unique individual investors, according to records from the Central Securities Depository cited in the board’s statement. That figure represents the investor base associated with the funds in question; it does not by itself mean that all investors will receive the same amount or face the same financial outcome. Nor do the liquidation decisions cover the entire portfolio management sector, but only the specified funds belonging to the seven companies. The size of the investor base puts the details of the liquidation and interim payments at the center of efforts to address the case’s consequences.
Rules adopted on October 27 set out interim payments and the liquidation process, assigning the liquidation of Bosphorus and Atlas funds to Ziraat Bank and Terra funds to İş Bank. The board said the process would be carried out in coordination with it and in cooperation with the relevant public and financial institutions, with the two banks conducting the liquidation according to the companies that established the funds. Money market funds have first priority for interim payments under the rules announced by the board. The payment to each investor in each fund may not exceed the investor’s net investment, calculated without indexation, or 1 million Turkish lira, whichever is lower. These amounts are therefore capped advance payments and do not guarantee full recovery of the final investment value.
On September 20, the board extended the regulatory deadline in the liquidation procedures from three months to six months, allowing more time to sell assets under more suitable conditions. It clarified, however, that the revised deadline does not mean the process will necessarily take six months, as it may be completed sooner depending on conditions. The extension comes amid the liquidation of funds involving multiple assets and large numbers of registered investors. The rules set a time limit for the process but leave its actual completion date dependent on how the liquidation proceeds. The date of completion therefore remains unspecified in the board’s announcement.
The assets of the funds that entered liquidation distress grew to more than $20 billion over three years, according to a Reuters report published on October 2, 2026. The report said some investors sought high returns to offset the lira’s depreciation and high inflation. Across the broader sector, assets under management at Turkish portfolio management companies reached $329 billion in August 2026, compared with $246 billion in August 2025, according to market regulator data cited by Reuters. The figures reflect sector growth alongside the widening fund crisis, but do not mean that all sector assets are subject to liquidation. The decisions concern 131 specified funds, while the total assets figure covers portfolio management activity in Turkey.
Reuters attributed growing interest in the funds to Turkey’s tight monetary policy, which aimed to curb inflation and encourage saving in lira, making products offering returns above inflation and local deposit rates more attractive. The report said some funds were concentrated in a single stock or asset, and that some traded shares of small, recently listed companies with low liquidity. Limited liquidity allowed large price moves in those shares and boosted the daily returns of funds that held them. In the final quarter of 2025, the Capital Markets Board said it had detected movements in thinly traded shares that were not explained by economic factors or companies’ financial fundamentals, particularly through hedge funds and money market funds. It added that subsequent rules were aimed at limiting the risks of manipulation and unsecured borrowing between related parties.
The fund crisis had affected Turkish stocks before Ergun’s detention: the main index entered a bear market, and September 2026 was its worst monthly performance since 2008, Reuters reported. The decline places the market reaction in the period before the detention order issued in November. Finance Minister Mehmet Şimşek had also warned in November 2025 about manipulation through certain funds, saying: "We know that these manipulations are carried out particularly through certain funds," Reuters reported. Şimşek said at the time that regulatory gaps would be addressed. In a separate assessment of the economic impact, Reuters quoted JPMorgan analysts as saying turmoil in the fund sector adds "significant downside risks" to their forecast for Turkish GDP growth of 3% in 2026.