Turkish President Recep Tayyip Erdoğan on Monday announced that repayments of up to 1 million lira ($20,000) to investors caught in Turkey’s fund crisis would begin this month once parliament passes legislation governing the liquidation of their funds.
Speaking after a cabinet meeting in Ankara, Erdoğan announced that a substantial proportion of investors would receive interim payments during October.
The crisis erupted in September after suspected manipulation of shares with limited trading activity triggered losses and withdrawal requests that some investment funds could not meet.
The Capital Markets Board (SPK), Turkey’s securities regulator, ordered the liquidation of 131 funds managed by seven portfolio management companies on September 17. The funds had 455,758 individual investors, a figure that does not represent the number still awaiting payment.
The nine-article bill, submitted Friday by lawmakers from Erdoğan’s ruling Justice and Development Party (AKP), is scheduled for consideration by parliament’s Planning and Budget Committee on October 14 before proceeding to the full chamber.
Some payments have already begun under existing liquidation rules. Nearly 44,000 investors in 17 funds managed by A1 Capital Portfolio Management, Bulls Portfolio Management and Pardus Portfolio Management had received payments by October 8, Vice President Cevdet Yılmaz explained during an interview with the state-run Anadolu news agency on Monday.
Negotiations were continuing with Atlas Portfolio Management over liquidation under existing rules, potentially covering about 58,000 investors, with an agreement expected to become clear this week, Yılmaz added.
For funds covered by the new legislation, advances would depend on the amount each investor contributed after withdrawals are deducted. Investors with net contributions below 1 million lira could receive that amount, while those above the threshold could receive up to 1 million lira. For funds other than money market funds, which invest in short-term financial instruments, advances could not exceed the value of investors’ holdings, according to the bill.
Investors who have already withdrawn at least as much as they originally contributed would not qualify for the advance, even if their accounts still show a balance, Yılmaz said.
He also acknowledged that one or two funds might lack enough cash to make payments up to the ceiling. If money is insufficient, the regulator could prioritize investors with the smallest net contributions or set a lower advance payment amount.
The 1 million lira ceiling does not guarantee that every investor will receive that sum or recover all their losses. Payments would come from fund assets and recovered money, with no Treasury funding, and advances would be deducted from final settlements.
Yılmaz previously estimated that the final liquidation process would take five to six months.
Erdoğan also disclosed that legal action had been taken against 282 people, among them fund company board members. He put the number jailed pending trial at 84, with arrest warrants issued for 27 suspects and 99 people subject to restrictions such as travel bans.
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