Turkish stock exchange chief remanded in custody as fund scandal widens

Stock exchange chief remanded in custody

Turkish authorities have remanded Korkmaz Enes Ergun, the removed general manager of Borsa Istanbul, in custody. Ergun was detained on Saturday, 31 October, and brought before an Istanbul criminal judgeship of peace on a request for remand on bribery grounds. Anadolu reported that Ergun is also being investigated for membership in a group formed to commit crimes. Reports of the court decision appeared on Tuesday, 3 November. Ergun joined the exchange in 1997 after graduating from the political sciences faculty of Ankara University, and was appointed general manager in 2021. Justice Minister Akin Gürlek then said the inquiry had found something broader than simple stock fraud, describing a comprehensive criminal organization behind the affair.

How the fund scandal began

In mid-September, the fund managers Pusula Portföy and Tera Portföy said they could not meet withdrawal requests from their investors, which shook the Istanbul exchange. Investigators allege that the funds manipulated share prices, with companies buying large amounts of shares in small firms to push up prices and fund values and so attract new savers. Tera's main fund rose more than 60,000% in three years and drew nearly half a million small savers, and according to La Libre such suspicious investment patterns should have prompted earlier intervention by regulators. The market regulator had asked funds to diversify their holdings under pressure from global index providers, and that request triggered mass withdrawals in mid-September. On 17 September, the Capital Markets Board (SPK) ordered the liquidation of 131 funds set up by Tera, Pusula, Hedef, Atlas, A1 Capital, Pardus and Bulls Portföy. Deutsche Welle puts the number of investors in those funds at 455,758, while Handelsblatt rounds the figure to about 455,000.

Wider probe, arrests and political fallout

The investigation has led to more than 100 arrests, including the general manager of Türkiye Sigorta and Türkiye Hayat Emeklilik and Ertan Aydın, a former AKP lawmaker who served as chief adviser to Recep Tayyip Erdogan when Erdogan was prime minister. Deutsche Welle reports that dismissals followed at the financial regulator and within the finance ministry. Fatma Batül Sayan Kaya, vice-chair of the AKP and a former family minister, resigned after accusations of undue gains of 1.3 billion Turkish lira (about 23 million euros), money she has since returned. Finance Minister Mehmet Simsek had publicly denounced market manipulation at the end of 2025.

Government response and the new law

President Recep Tayyip Erdogan has described the problem as limited to a part of the capital markets, saying there is no risk to the Turkish financial system or to the economy. An economic commentator told the pro-government platform TGRT that investigations into the market's top manager would fundamentally shake investor confidence and could lead to an outflow of foreign capital. A law passed at the end of October sets out how the affected funds will be wound down and how investors will be repaid in stages, but full repayment is not guaranteed. The inquiry is also examining how such transactions could continue for so long and whether oversight bodies intervened sufficiently.