I. Introduction
On 17 September 2026, the Capital Markets Board of Türkiye (“CMB” or the “Board”) resolved to liquidate 131 investment funds founded by seven portfolio management companies. According to the CMB’s announcement of 23 September, these funds had 455,758 individual investors. Law No. 7596 on Certain Investment Funds Subject to Liquidation (“Law No. 7596”), published on 27 October 2026, and the implementing principles announced by the CMB on the same day set out how payments will be made to investors in the funds still under liquidation.
Investors whose losses are not covered at the end of the liquidation may claim before the administrative courts compensation for the damage arising from the CMB’s failure to duly perform its supervisory and oversight duties. This requires establishing a breach of duty attributable to the Board and the effect of that breach on the loss.
This note first addresses the CMB’s supervisory and oversight duty and the conditions under which investors may bring a full remedy action (II). It then reviews the court decisions concerning the CMB’s administrative liability (III).
The priority payment claims of investors whose redemption orders were not executed and whose participation units are held in the unit blockage sub-account (PBLK), and the remedies available for such claims, fall outside the scope of this note.
II. The CMB’s Supervisory Duty and the Full Remedy Action
Article 125 of the Constitution obliges the administration to compensate the damage arising from its own acts and actions. Article 167, which provides for measures to ensure the sound and orderly functioning of the money and capital markets, is the constitutional basis of the public duty in this field.
The Capital Markets Law No. 6362 (“CML”) aims to protect the rights and interests of investors and, to that end, confers on the Board duties and powers of regulation, oversight and supervision. Articles 88 and 89 of the CML govern risk-based supervision, the obtaining of information and documents and the examination of records. Articles 96 and 97 provide powers of intervention against unlawful activities and the deterioration of financial standing. For funds within the scope of the Communiqué on Principles Regarding Investment Funds (III-52.1), the accounts and transactions of the founder, the manager and the portfolio custodian relating to the fund are subject to the Board’s supervision.
Administrative liability may arise where this supervisory and oversight obligation is breached through a service fault. A service fault exists where a public service does not function at all, functions late or functions improperly. For a service fault to give rise to liability in damages, there must be an actual and quantifiable loss and an adequate causal link between the fault and the loss. This assessment examines whether, had the Board intervened in time, the loss could have been prevented or to what extent it could have been reduced.
Where the CMB fails, through a service fault, to carry out the necessary supervision or is late in intervening, the route to follow is, as a rule, the one set out in Article 13 of the Administrative Procedure Law No. 2577 (“APL”): first to claim compensation from the Board and, if the claim is expressly or impliedly rejected, to bring a full remedy action based on the administrative action. Under the general rule of the APL, an application under Article 13 must be made within one year from the date on which the administrative action is learned of and in any event within five years from the date of the action. In determining when time starts to run, account is also taken of when the investor was in a position to learn of the loss and of its connection with the supervisory failure. If the claim is rejected in whole or in part, the action must, as a rule, be brought within sixty days from the day following notification of the rejection. If the CMB does not reply within thirty days, the sixty-day period for bringing the action starts on the day following the expiry of the reply period.
III. The CMB’s Administrative Liability in Case Law
One of the questions most frequently asked by fund investors considering a compensation action against the CMB is whether there is a precedent that sheds light on the current fund crisis. As regards the fund crisis that came onto the public agenda on 17 September, there is as yet no precedent that could serve as a direct example of the CMB’s supervisory liability. Nevertheless, there are court decisions that may provide guidance on the liability of the administration and, specifically, of the CMB.
In this context, certain decisions rendered in the İmar Bankası disputes are of particular importance. In the facts underlying these decisions, İmar Bankası, although its intermediation licence had been revoked in 1990, continued to collect money through announcements and advertisements under the guise of sales of government domestic debt securities (“GDDS”) without holding the corresponding securities. On 2 December 2005, the 13th Chamber of the Council of State ordered the CMB and the Banking Regulation and Supervision Agency (“BRSA”), which had failed to prevent this activity in time, to pay the investor’s loss with statutory interest in equal shares[1]. On 4 May 2006, the Plenary Session of the Administrative Law Chambers of the Council of State reversed the judgment on procedural grounds, because the full remedy claim arising from the supervisory failure had been raised in the same petition as an annulment claim against a Council of Ministers decree[2]. The decision of the 13th Chamber nevertheless provides an important basis for today’s fund cases when examining which warning signs the Board could have noticed and when, and whether the measures available to it at that stage could have prevented the loss[3].
The Derborsa decision is also among the decisions that may be taken into account when assessing the CMB’s liability in the context of the fund crisis. In the underlying case, two investors who had opened a joint account at Derborsa in 1996 granted a power of attorney to a representative to carry out their trading transactions. In the examination carried out after the death of one of the account holders, it was established that the representative had abused this authority and transferred certain shares, without the investors’ knowledge, to his own account and to the accounts of other persons. The Istanbul 1st Commercial Court of First Instance ordered the return of part of the shares in dispute and the payment of the related dividend receivables.
During the enforcement of the commercial court’s judgment, however, the CMB interpreted Derborsa’s liability as limited to certain Tüpraş shares. The Board decided that the equivalent of these shares be held in blockage at Takasbank and that the remaining securities belonging to Derborsa be returned. The Ankara 6th Administrative Court, finding that the Board had misapplied the commercial court’s judgment and that the receivables could not be collected because of the return, annulled the Board’s decision and awarded compensation against the CMB. This judgment was upheld on review by the Council of State and became final[4]. The Derborsa decision shows that the intermediary institution’s debt towards the investor and the CMB’s liability in damages arising from its own act that prevented collection may be assessed separately.
The timing of the measures taken by the CMB and their suitability for preventing the loss have also been examined in some court decisions. For example, in a dispute arising from the rights issues of a publicly held sports company, the claimant, who had previously purchased the company’s shares, participated in the 2012 rights issue by paying TRY 63,000 and left the company in 2014 by selling his shares. The claimant sought compensation of TRY 109,740, arguing that the CMB had authorised the first rights issue without ensuring that investors were adequately informed, although it was aware of the company’s financial situation and of the problems in its financial disclosures. In its decision of 22 December 2022, the 13th Chamber of the Council of State stated that the CMB’s approval of the prospectus did not guarantee the accuracy of the information contained in it[5]. The Chamber took into account that, when examining the first application, the CMB had required the company to prepare a new valuation report, to disclose in the prospectus that the controlling shareholder, the sports club, would participate in the rights issue by setting off its receivable from the company against its capital debt instead of injecting cash, and to correct the relevant financial statements. In its subsequent examinations the Board had also imposed sanctions concerning the financial statements and the public disclosure obligation and had removed the next rights issue application from its agenda. The Chamber found the Board’s failure to issue a negative opinion on the independent board members elected in breach of procedure open to criticism, but did not establish an adequate causal link between that choice and the investor’s loss. Concluding that the necessary measures had been taken in time, the Chamber upheld the dismissal.
In the forex cases, investors claimed that the losses they suffered from highly leveraged transactions resulted from the CMB’s failure to regulate the market in a timely and sufficiently strict manner and to supervise the misleading advertisements of intermediary institutions. In support of this claim, they also relied on the Board’s reduction of the maximum leverage ratio from 100:1 to 10:1 in 2017. The courts of first instance found that the CMB had brought forex transactions under regulation in 2011, had limited these transactions to authorised institutions, had carried out regular inspections and had imposed sanctions against unauthorised activities. They also found that the risk disclosure forms given to investors when opening accounts explained that they could suffer losses if prices moved contrary to their expectations. Assessing these facts together, the courts attributed the loss largely to the materialisation of a transaction risk known to the investors from the outset and did not establish an adequate causal link between the CMB’s supervision and the loss. By its decisions of 21 May and 23 October 2024, the 13th Chamber of the Council of State upheld the dismissal of the actions[6].
IV. Conclusion
A fund investor whose loss is not covered at the end of the liquidation may claim compensation from the CMB to the extent that the investor can show that the loss resulted from an act of the CMB or from its failure to duly perform its supervisory and oversight duties. The fault assessment in the İmar Bankası case and the Derborsa decision show that, even where the loss was caused by a private institution, the Board’s liability arising from its own act or omission may be examined. The rights issue and forex decisions, in turn, show the importance of correctly identifying the source of the loss in that examination. Compensation requires that the Board breached its supervisory and oversight duty and that this breach caused or increased the investor’s loss.
In our opinion, payments made through liquidation and recovery under Law No. 7596 do not prevent a full remedy action based on the CMB’s own service fault. However, the amounts recovered under the liquidation regime provided for by Law No. 7596 will be relevant in determining the amount of the loss. Since the time limits under Article 13 of the APL may also run while the liquidation is ongoing, investors should assess the application period according to the dates in their own files. Where the loss has arisen and its amount becomes clear during the proceedings, the amount claimed in the petition may be increased once, under Article 16/4 of the APL, by paying the fee, at any time until the final judgment.
This note has been prepared for general information purposes on the basis of the legislation in force and the court decisions available as of its publication date. It does not constitute legal opinion or advice. The conditions, time limits and outcome of a compensation claim and a full remedy action against the CMB vary according to the fund in which the investor holds participation units, the investor’s transaction history and the payments made during the liquidation process. Applying the explanations in this note directly to a specific case may lead to incorrect or incomplete results. We therefore recommend consulting a lawyer before making any application.
[1] Council of State, 13th Chamber, 02.12.2005, E. 2005/2625, K. 2005/5753.
[2] Council of State, Plenary Session of the Administrative Law Chambers, 04.05.2006, E. 2006/109, K. 2006/353.
[3] The course of the İmar Bankası disputes was later changed by Law No. 5667. That law established a payment mechanism financed by special-issue GDDS issued by the Treasury. The regime governing principal and interest was thus also applied in the GDDS cases pending before the administrative courts. For this reason, on 19 October 2022, the 13th Chamber of the Council of State reversed a partial compensation judgment rendered against the CMB and the BRSA in another case. The Constitutional Court (“TCC”), which regards the supervision of the financial markets as one of the State’s obligations, also found the property-right complaints inadmissible in its Turgay Şen and Mehmet Fatih Akın and Others decisions because this special remedy had not been exhausted.
[4] Istanbul 1st Commercial Court of First Instance, 08.12.1999, E. 1997/1093, K. 1999/1225. Ankara 6th Administrative Court, 12.06.2003, E. 2002/988, K. 2003/930. Council of State, 13th Chamber, 14.06.2005, E. 2005/972, K. 2005/3064 (upholding) and 22.11.2005, E. 2005/9136, K. 2005/5605 (dismissal of the request for rectification). The decisions are summarised in the decision of the Civil Division of the Court of Jurisdictional Disputes dated 05.03.2007, E. 2006/68, K. 2007/24.
[5] Council of State, 13th Chamber, 22.12.2022, E. 2016/3806, K. 2022/4959.
[6] Council of State, 13th Chamber, 21.05.2024, E. 2019/3813, K. 2024/2307 and 23.10.2024, E. 2020/1282, K. 2024/4244. For the change in the leverage limit, see Communiqué No. III-37.1.b, Official Gazette of 10.02.2017, No. 29975.