This article examines in detail the situations that may be encountered during the liquidation process of investment funds, the effects of recently enacted legal regulations on investors, and the legal remedies available during this process. It explains the various types of lawsuits aimed at protecting our clients' rights and minimizing potential losses, as well as the critical points that require attention.
Investor Rights and Legal Remedies in the Fund Liquidation Process
The liquidation process of investment funds can give rise to complex legal consequences for the investors involved. The developments encountered during this process and the legal mechanisms available to investors are of critical importance for the protection of rights. Taking into account that each case has its own specific characteristics, this briefing has been prepared to provide a general framework.
Current Situation and Legal Regulations
The Capital Markets Board (SPK) has decided to liquidate numerous funds established by certain portfolio management companies. These liquidation procedures are carried out by different financial institutions depending on the founder of the fund. Law No. 7596, which recently entered into force, contains significant provisions that directly affect the status of investors in this process. These provisions can be summarized as follows:
Investors who placed a redemption (sale) order before a specific date, did not receive payment, and had their shares blocked are considered fund unit holders rather than creditors under the legal regulation.
If the assets of the fund remain insufficient, payments will be made based on the "net investment amount," calculated by updating the amounts deposited into and withdrawn from the fund for inflation. The payment process is envisaged to start with the smallest investors.
Interim payments that may be made are subject to a specific upper limit per person, and the SPK has announced that these payments will start with money market funds.
Lost or misappropriated values in the fund will be collected from the founding company and responsible individuals through the Savings Deposit Insurance Fund (TMSF), returned to the fund, and distributed to investors.
The law also takes into account payments that investors may obtain through litigation and deducts these amounts from the final payment to be made from the fund. This demonstrates that the right to seek legal remedies remains intact.
Legal Remedies Available to Investors
There are various legal actions that investors can pursue during the fund liquidation process. These lawsuits are not alternatives to one another; rather, each addresses a different area of liability. Which remedies are appropriate for you will be determined by examining the documents in your file.
1. Compensation Lawsuit Against the Custodian Bank
The assets of every investment fund are safeguarded by a custodian bank. The custodian bank has an obligation to supervise whether the fund is managed in accordance with the legislation. If the custodian bank condones or fails to prevent the unlawful transfer of fund assets to other companies, it may be held liable for the resulting damages. Since the financial standing of custodian banks is generally strong, this path can offer an effective resolution in many cases. Identifying the custodian bank during the period in which your investment took place is of great importance.
2. Compensation Lawsuit Against the Distributing Bank or Brokerage Firm
Institutions that offer investment funds to investors (banks or brokerage firms) are obligated to adequately inform investors about risks, offer products suitable for the investor profile, and execute orders in a timely manner. In the event of a breach of these obligations, the liability of the relevant institution may arise. The strength of such a lawsuit relies on documents such as correspondence with the institution, signed forms, and transaction records.
3. Compensation Lawsuit Against the Capital Markets Board (SPK)
If the Capital Markets Board delayed its decision to liquidate the funds despite identifying the risks, a claim for compensation may be filed against the state for damages arising from this delay. This process requires first submitting a written application to the SPK and subsequently filing a lawsuit before the administrative court. In this legal avenue, what measure the SPK should have taken and when must be demonstrated with concrete evidence.
4. Debt Recovery Lawsuit for Those Who Placed a Sale Order but Did Not Receive Payment
The law considers investors who placed a sale order but could not receive their money as fund unit holders. Under current circumstances, the only legal way to change this status is for the Constitutional Court to annul the relevant statutory provision. Therefore, filing this lawsuit should only be considered in cases where bank and fund records clearly demonstrate that the sale transaction was definitively completed in terms of price and amount. No guarantee is given that a definitive result will be achieved through this avenue.
5. Participation in Criminal Investigations
It is possible to join the criminal investigations conducted against fund managers as an "aggrieved party" (victim of the offense). This participation can particularly facilitate the process of obtaining evidence for other compensation lawsuits.
Important Points to Consider
Interim Payments
If an interim payment is made to you during the liquidation process, accepting this payment does not mean that you waive your litigation rights. However, contacting our law firm prior to the interim payment is important so that a formal notice reserving your rights can be sent on your behalf. We kindly request that you submit any document requested to be signed by the bank to us before signing it.
Costs and Expenses
In legal proceedings, lawsuits are generally filed for a portion of the damages in order to limit the initial court fee burden. As the exact amount of damages becomes clear, the claim amount will be increased. However, if the lawsuit is concluded unfavorably, there is a risk of paying litigation expenses and statutory counterparty attorney fees based on the claimed amount. These risks are evaluated separately with our clients for each specific lawsuit.
Time Limits
The continuation of the liquidation process does not suspend the statutory time limits for filing a lawsuit. The period for applying to the SPK is one year from learning of the damage, and statutory limitation periods also continue to run for compensation claims against banks. Therefore, legal steps must be taken without waiting for the completion of the liquidation process.
Documents Required for Preparation
In order for your file to be examined in detail and for legal strategies tailored to your situation to be determined, it is important to prepare the following documents:
Fund purchase and sale receipts
Account statements (showing fund and cash movements)
Account transaction statements obtained from e-Devlet (e-Government) or the Central Securities Depository (MKK) e-Yatırımcı (e-Investor) platform
If a sale order was placed, screenshots and records showing the exact time of the order
Correspondence, emails, and messages exchanged with the bank or brokerage firm
Signed agreements, risk disclosure forms, and suitability test documents
Following the submission of these documents to us, the legal status of your file will be clarified through an examination. Since the transaction types and dates of investors vary, each file is evaluated within its own specific circumstances.