Turkey Arrests Tera Founder as $18bn Fund Crisis Hits 455,758 Investors
The founder of brokerage Tera Yatırım is among executives arrested as Turkish authorities investigate alleged market manipulation and ‘Ponzi-like’ investment practices.
By Abdullahi Yusuf
Turkish authorities have arrested the founder and chairman of brokerage Tera Yatırım as an investigation into an investment fund crisis involving more than $18 billion and 455,758 investors widens.
Emre Tezmen was formally arrested in Istanbul on Wednesday alongside four other financial executives, after initially being detained on September 19. The arrests came as Turkish authorities moved against firms at the centre of a crisis that has left investors waiting for the liquidation of 131 investment funds.
The Capital Markets Board has ordered the liquidation of the 131 funds managed by seven investment firms. The regulator said 455,758 distinct investors hold stakes in the funds, whose combined assets were worth more than $18 billion before liquidation.
The investigation centres on allegations of market manipulation and investment structures described by Turkish authorities as “Ponzi-like”. The authorities have not established that the funds constituted a Ponzi scheme, and the allegations remain subject to investigation.
The crisis emerged after some fund managers struggled to meet investors’ requests to withdraw their money. Funds managed by Tera Portföy and Pusula Portföy had built large positions in shares that were difficult to sell quickly without pushing down their prices.
Tera’s fund-management unit said on September 16 that it had failed to make some payments to investors seeking to withdraw from two funds. Pusula Portföy also reported delays, prompting wider concern in Turkey’s financial markets.
Investigators are examining whether fund managers used concentrated holdings in thinly traded shares in ways that may have inflated valuations and reported returns, potentially attracting further investment.
Before the payment failures, index provider MSCI said in June that it had identified possible coordinated trading involving fund holdings linked to smaller Turkish listed companies, warning that such activity could distort prices. It did not name Tera or another specific company at the time.
Turkish authorities have also frozen assets linked to executives at several financial firms and restricted transactions involving some executives, their spouses and close relatives. Prosecutors have requested records of money and cryptocurrency transfers abroad dating back to 2024 as part of the investigation.
Tezmen was arrested alongside Tera board members Kerem Alkin and Emre Alkin, Tera Portföy General Manager Alper Öztürk and Pusula Finans Holding Chairman Serdar Turhan, according to Turkish reports.
The authorities have since widened the crackdown. Turkish courts jailed 17 more people pending trial, bringing the number of people jailed in the investigation to 26, while police sent another 21 suspects to prosecutors on Thursday. Nearly 750 million Turkish lira in assets have also been frozen or seized.
The regulator has given the institutions overseeing the liquidation up to six months to sell the affected funds’ holdings. Türkiye İş Bankası is overseeing funds managed by Tera Portföy, while state-owned Ziraat Bankası is handling funds managed by six other firms.
Investors are expected to receive proceeds in proportion to their holdings as the assets are sold, but authorities have not said how much they will ultimately recover. The longer liquidation period was adopted to allow the assets to be sold under more favourable market conditions rather than forcing large volumes of shares onto the market at once.
Finance Minister Mehmet Şimşek has put the value of the affected funds at about $18.3 billion and said the crisis is concentrated in a limited part of Turkey’s investment-fund sector. The Borsa Istanbul All Shares index has fallen sharply since the crisis began, with about 50 stocks losing 40 per cent or more.
The investigation and liquidation process are continuing, with authorities examining the alleged market manipulation and tracing assets linked to the affected funds.
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