Türkiye weighs repayment priorities in fund crisis

ANKARA

Türkiye is considering giving priority to money market fund investors in repayments from 131 funds ordered into liquidation.

Treasury and Finance Minister Mehmet Şimşek is expected to brief the Cabinet on Sept. 28, with technical meetings later in the week to work out the details.

One proposal would prioritize money market funds holding government and corporate bonds, followed by equity funds and then hedge funds.

The approach would give precedence to funds whose assets can be readily converted into cash.

A separate proposal to pay investors with holdings of 1 million Turkish Liras or less first would reportedly require legislation and has raised concerns over its constitutionality.

The Capital Markets Board (SPK) ordered the liquidation of 131 funds run by seven asset managers on Sept. 17.

The funds have 455,758 investors, the regulator said, citing central securities registry data.

İşbank is handling the liquidation of Tera Portföy’s funds, while Ziraat Bank is responsible for those managed by Pusula, Hedef, Atlas, A1 Capital, Pardus and Bulls Portföy.

The banks will sell assets according to market and liquidity conditions and transfer the proceeds to investors’ custody accounts in proportion to their holdings. Investors do not need to apply separately.

The SPK has extended the maximum liquidation period from three months to six, saying the process could be completed earlier if conditions allow.

The regulator also said all orders submitted through the TEFAS fund trading platform on Sept. 17 had been cancelled.

Those investors will receive their share of liquidation proceeds, as will investors whose earlier orders went unfulfilled because a fund defaulted or failed to announce a price.

Meanwhile, Istanbul prosecutors lifted asset freezes on 45 companies and 19 funds following a new SPK assessment.

Measures against 42 individuals remain in force as the investigation into suspected money laundering and capital markets violations continues.

In a Sept. 25 bulletin, the SPK separately announced its decision to file criminal complaints against 11 people, including Emre Tezmen and Kerem Alkin, over alleged manipulation in Özata Denizcilik shares.

The bulletin said those seeking leniency under the law’s repentance provisions must pay the Treasury twice the benefit obtained for themselves or others, subject to a minimum of 500,000 liras. It required payment and supporting documents within 15 days of the board’s decision.