Turkey detains Tera chairman amid $18 bn Ponzi‑style fund probe affecting hundreds of thousands of investors

The founder of Tera Yatırım, a Turkish brokerage firm whose fund‑management subsidiary reported missed payments last week, will remain in custody pending trial.

The arrest of Emre Tezmen, together with four other individuals, coincides with a situation where investors in 131 Turkish funds may have to wait up to six months for their assets to be liquidated, with no guarantee of full repayment.

The crisis started when several funds, among them those managed by Tera Portföy and Pusula Portföy, encountered difficulties meeting withdrawal requests from savers. These funds were heavily invested in illiquid shares; rapid sales could depress market prices and diminish the cash needed to satisfy investors.

Tezmen, initially detained on 19 September, was formally arrested in the early hours of Wednesday, together with Tera board members Kerem Alkin and Emre Alkin, Tera Portföy’s general manager Alper Öztürk and Pusula Finans Holding’s chairman Serdar Turhan, according to Turkish broadcaster NTV.

Kerem Alkin, a former foreign‑ministry official who retired last year, held the post of Turkey’s ambassador to the OECD from 2021 to 2024. His brother Emre is a prominent economist and TV commentator.

Authorities have frozen assets belonging to executives of several financial firms and imposed transaction restrictions on them, as well as on their spouses and close relatives, the state news agency Anadolu said.

Prosecutors have asked for documentation of monetary and cryptocurrency transfers abroad dating back to 2024, aiming to determine if assets were moved overseas.

Bulls Yatırım brokerage announced on Wednesday that its chairman, Kemal Akkaya, had been released after providing testimony. He told prosecutors that the firm had no involvement in the so‑called Ponzi or chain‑scheme structures.

On Friday, shortly after the scandal surfaced, Justice Minister Akın Gürlek posted on social media that “those who exploit the sweat, labour, and savings of our citizens will be held accountable before the law!” He added that authorities were investigating allegations of Ponzi‑like practices.

At that point, four suspects were placed in pre‑trial detention and 51 individuals were prohibited from leaving Turkey.

How the funds unravelled

Funds concentrated a large portion of their capital in thinly traded shares. With limited supply, even modest purchases could lift share prices significantly.

These inflated valuations boosted reported returns, attracting fresh investors whose money was directed into the same or correlated equities. Certain managers also leveraged their holdings to acquire additional assets.

When savers attempted to withdraw funds, liquidating those holdings threatened to depress prices. Escalating redemption demands created an acute cash crunch: the funds required liquidity to meet redemptions, yet rapid sales risked further price declines.

Warning signs emerged well before the payment delays of last week.

In June, index provider MSCI warned of “possible coordinated trading” in holdings tied to smaller Turkish listed companies, suggesting potential price distortion. MSCI did not identify Tera or any other firm as being involved in market manipulation.

Tera’s share price reportedly surged over 50,000% at its peak, just four years after the company listed.

Turkish regulators tightened investment‑fund rules in August. MSCI indicated it may revisit the inclusion of Turkish securities in its indices if progress remains inadequate by its November review.

Containing the damage

The Capital Markets Board ordered the liquidation of 131 funds managed by seven firms. As of Wednesday, 455,758 individual investors were exposed. İşbank and state‑owned Ziraat Bank will supervise the liquidation process.

Large‑scale selling could depress asset prices. To mitigate this, the regulator extended the liquidation timeline from three to six months on 21 September. “The regulation aims to allow the funds under liquidation to be sold under the most favourable conditions, considering their portfolio structures and market circumstances,” the board stated.

Investors are slated to receive distributions proportional to their holdings as assets are sold, though the final recovery amount remains uncertain.

Finance Minister Mehmet Şimşek estimated the funds’ total value at $18.3 billion (€15.9 bn) and expressed confidence that the crisis would not permeate broader Turkish financial markets.

“We have placed the problematic area under quarantine,” the minister remarked in a TV interview, pointing out that the impacted funds represent roughly 10 % of the sector.

Since the beginning of last week, the Borsa Istanbul All Shares Index has dropped 12 %, while around 50 constituents have lost 40 % or more of their value.

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