Ziraat Bank has transferred money for about 43,000 fund investors to banks and brokerages for payment, as the ruling party prepares legislation governing interim payouts and the recovery of assets.
The transfers cover 17 funds established by A1 Capital, Bulls and Pardus, the Communications Directorate said on Oct. 8.
The receiving institutions will credit investors’ accounts as quickly as possible, it said.
Treasury and Finance Minister Mehmet Şimşek said the three portfolio management companies were undergoing ordinary liquidation.
The wider process covers 131 funds run by seven companies, affecting hundreds of thousands of investors.
The ruling Justice and Development Party (AKP) is expected to submit its bill to parliament on Oct. 9.
Prepared under parliamentary group leader Abdullah Güler, the draft sets out how investors’ claims would be calculated, payments distributed and assets recovered to cover losses.
It provides for interim payments of up to 1 million Turkish Liras per person, without exceeding investors’ net investments or confirmed entitlements. These would be advances against the amounts due from liquidation.
The Capital Markets Board (SPK) could prioritize investors with the smallest net holdings or set a common initial payment threshold.
If available cash were insufficient, it would be distributed proportionately among eligible investors.
To calculate net investments, past cash flows would be adjusted using the average of changes in consumer and domestic producer prices.
Withdrawals would be offset against the earliest contributions first.
The bill would also establish a voluntary repayment mechanism for those who earned above-normal returns by selling fund units at inflated valuations before liquidation or trading shares held by the funds.
Amounts to be returned would be assessed against comparable fund returns, stock indices or other objective market benchmarks.
Assets seized or confiscated in criminal proceedings could be used to cover investor losses.
The Savings Deposit Insurance Fund (TMSF) would sell or liquidate assets that could not be transferred directly to the affected funds.
Şimşek said the TMSF had opened separate accounts for each of the 131 funds, alongside a general account, to receive recovered money and voluntary returns.
Speaking in Istanbul on Oct. 8, he said small investors and money market funds were being given priority, while proceedings involving some portfolio management companies could take longer.
“We are not downplaying the problem,” Şimşek said, pledging further legal and administrative measures to prevent similar problems.
He also said those responsible for market-abusing practices would be held accountable.
Parliament separately rejected opposition motions seeking an inquiry into the fund problems.
