Turkish authorities detained five people after a cash crunch left some investment funds unable to return money to investors, prompting regulators to step in and order the liquidation of 131 funds.
The trouble in the fund industry triggered a sharp selloff in Turkey’s stock market this week, forcing authorities to introduce measures aimed at calming investors and preventing the problems from spreading.
Turkey’s Capital Markets Board ordered Isbank and state-owned Ziraat Bank to oversee the winding down of 131 funds run by seven asset managers, including Tera Portfoy, Pusula Portfoy and Hedef Portfoy.
The funds are being liquidated after some failed to meet redemption requests, meaning they could not raise enough cash when investors asked to withdraw their money.
The Justice Ministry said Pusula Holding Chairman Serdar Turhan, Tera Yatirim Holding Chairman Emre Tezmen and three fund administrators had been detained as part of the investigation.
Four other suspects had previously been arrested, while other people identified by the market regulator have been barred from leaving Turkey and had their assets frozen, the ministry said.
Finance Minister Mehmet Simsek said the funds being liquidated were worth about $18.3 billion, but said the process should not put additional pressure on the Istanbul stock market.
Simsek said regulatory changes were designed to contain the fallout and prevent problems at the funds from spreading more broadly through financial markets. Authorities would continue to monitor developments closely, he said. Source: REUTERS
