Long before Tera imploded, suspicious trading had begun to alarm executives, investors and regulators By Ugur Yilmaz, Kerim Karakaya and Tugce Ozsoy By all outward appearances, life was good, very good, at Tera Group, the boutique firm that had gone from obscurity to the talk of Istanbul in a matter of months.

This was back in the late days of last winter, and Tera’s stock had improbably just skyrocketed 2,000%, bathing Emre Tezmen, the wunderkind founder, and his inner circle in riches and fame. There was a steel-gray Learjet 60 waiting for Tezmen, a newly minted billionaire, at the airport; a seat at the table at university and corporate boards; and a project underway to build villas along Spain’s sun-splashed Mediterranean coast.

Inside Tera’s headquarters in Istanbul’s business district, though, the alarm bells were ringing, louder and louder.

The firm’s meteoric ascent was making many executives uneasy, and some had begun to speak up. After years of flying under the radar, they noted, Tera was suddenly all over social media, with Tezmen brashly hyping it as the Goldman Sachs of Turkey. And so much cash was pouring in from mesmerized retail investors that the firm needed to take on ever growing heaps of leverage to keep generating the same spectacular returns that had made it famous. Transactions that were once small and inconspicuous had become so big they were impossible for the authorities to ignore, according to former company officials.

The internal disputes grew so heated that on one afternoon in February, Tezmen’s most trusted lieutenant, Emir Munir Sarpyener, got into a shouting match with other top executives, according to people familiar, who asked not to be identified speaking about internal matters. Things kept spiraling out of control, they said, to the point where punches were thrown. Some executives began to resign rather than sign off on transactions they opposed.

A few blocks away, there was a sense of dread in the hallways of the stock exchange, too. Regulators knew troubles were brewing. They indeed saw what the Tera executives feared they would see: a strategy that appeared to revolve around creating massive paper gains and could be pumped over and over again, according to officials at the bourse and markets regulator. Funds buying illiquid stocks, then borrowing to buy even more of the same shares.

Exchange inspectors, who spoke on the condition of anonymity, say they repeatedly flagged the unusual market moves to superiors. And the finance minister himself, Mehmet Simsek, a darling with the international investing community who had helped prop up support for President Recep Tayyip Erdogan, was so worried that in November he gave a speech that he hoped would put traders on notice. “The market,” Simsek warned, “isn’t a playground.”It’d take another 10 months — and billions more in apparently engineered financial profits — before that message, finally, got through and popped the bubble.

Now, with Tera’s stock all but wiped out; and hundreds of thousands of investors clamoring for their money; and Tezmen and dozens of associates sitting in jail cells, stripped of their private jets and Bentleys and McLarens, one nagging question keeps coming up. If so many people saw a house of cards hiding in plain sight, why was it allowed to grow so large — and for so long — that when it burst, it triggered a financial market meltdown and a political crisis for Erdogan?

“Many of those who dared to raise concerns about these funds were silenced or threatened,” said Murat Gulkan, chief executive officer of OMG Capital Advisors in Istanbul. “This suggests the problem goes much deeper, pointing to a more fundamental failure in regulatory oversight.”Tezmen now faces charges of fraud and establishing a criminal organization. He has denied any wrongdoing. Others in his orbit have been accused of market manipulation and are awaiting trial.

This story is based on interviews with more than 25 investors, government officials and employees of the companies owned by Tera. Many of them asked not to be identified so that they could speak freely about confidential and internal matters.

Turkey’s chief markets regulator said the delay in introducing tougher rules on market manipulation reflects the difficulty of implementing changes without damaging other parts of the fund industry. It consulted the stock exchange, clearing and settlement bank, the securities registry, industry groups and investors along the way, according to a statement.

One senior official at the Capital Markets Board, who asked not to be identified speaking about internal deliberations, said there was a reluctance among some officials to push ahead with rules that would hurt Tera.

The markets regulator and Borsa Istanbul didn't respond to requests for comment. Calls to the main lines at Tera and two of its subsidiaries went unanswered, and a lawyer for Tezmen didn’t respond to request for comment. ‘A Manipulated Bubble’Back in the summer of 2025, Tera was mostly operating out of the spotlight. Tezmen, a 53-year-old former financial analyst, had built the brokerage and asset manager into a Turkish conglomerate with reach into defense, real estate and farming.

TLY was Tezmen’s signature creation: an investment fund built around making highly concentrated bets that would later become the epicenter of the crisis. It started with finding the right IPOs. People familiar with the firm’s business say Tezmen and his team approached company owners with a simple proposition: go public with a small number of shares and watch the price go up. Once the stock started trading, Tera’s own funds would buy up big stakes, using leverage to drive prices higher, they said.

The circular strategies started to spread beyond Tera, taken up by more aggressive imitators, like Pusula Portfoy. In some cases, funds would focus on buying other funds to create a self-reinforcing cycle of investment, said the people.

Another technique involved recycling cash from corporate bonds, they added. Investment bankers would find a company and help it arrange a bond sale, with the main investors being the firm’s own funds buying at inflated valuations. With fresh financing in hand, the company would then invest in the fund — effectively returning the cash so the cycle could be repeated, according to the people.

“The whole thing was very transparently a manipulated bubble with absurd valuations underpinning the returns,” said Kamil Dimmich, a partner at North of South Capital LLP in London.

From the beginning, Tera had its share of critics, the most outspoken being Ramazan Basak, an ex-official of the financial crimes watchdog. Even in 2022, when the company was gearing up to go public, he urged regulators to block the deal, and then throughout the past year, he accused Tera of artificially inflating market prices.

Basak said Tera and its backers worked to silence any naysayers. He was detained twice by police, once in front of his grandchild in 2025, and accused of spreading misleading information after making public complaints about what he saw as Tera’s market manipulation.

“The scheme could not have been sustained for so long without very strong support from both public- and private-sector actors,” he said in an interview. “Had regulators and authorities acted earlier on warnings, the situation would not have reached its current scale.”Others say they were pressured into retracting their statements after speaking out on social media. One money manager, who criticized Tera on X, said he received a threatening phone call telling him to stay away and stop talking. Another investor said he got a barrage of online hate mail. Both said they didn’t know who was making the threats and later deleted the posts.

In another instance, two money managers said they met with Capital Markets Board officials to air their concerns privately, both in 2025 and 2026. Concerned that the regulators were more sympathetic to Tera, they refused to put their objections in writing, they said.

In the months before the crash, even though whispers were growing around Istanbul, few dared to take on Tera and its powerful owner.

Race to the Exits By the summer, however, the scrutiny had gone global. Turkey’s unusual stock-market activity was drawing international attention, and MSCI Inc. threatened to review the country’s emerging market status. “Investors have highlighted recurring instances of possible coordinated trading behavior,” wrote the index provider in June. The wall of silence around Tera had finally cracked.

By July, with the company’s stock price now in freefall, investors were getting nervous and starting to pull their money. In a three-month span, the shares plunged about 60%. Big selloffs had happened before, but this was different.

As the anxiety mounted, Tezmen pleaded with investors for more time, saying he could repay their losses if they stayed on, according to a person familiar with the conversations. He also started aggressively buying blue-chip stocks in an attempt to stabilize TLY and slow the redemptions. For a few days, that seemed to work.

But at Pusula, one of the smaller funds that mimicked Tera, the losses were becoming too great. By August, Pusula was facing an all-out race for the exits and the company was collapsing.

The crisis also started to spill over to the broader market, sinking hundreds of stocks on the Borsa Istanbul. Over a weekend in early September, Tera officials were trying to arrange a meeting with Simsek to discuss the new regulations and a rescue deal to buy the failing Pusula, according to people familiar.

In response to a request for comment from Bloomberg News, the Ministry of Treasury and Finance said Simsek had not held any private meetings with market participants during his time in office, and declined to comment further.

Tera announced it would buy Pusula a few days later. Inside Pusula, the news brought relief. Management gathered staff into a meeting and promised the company would survive with a stronger partner. They were all relaxed, said a former Pusula employee, because up until that point everything that Tera touched turned to gold.

But it was too late. The losses kept snowballing, and a report soon circulated that Pusula’s chairman had left the country. The deal was over. Funds at both firms defaulted within days, with Tera disclosing more than 300 billion liras ($6 billion) of redemption requests it couldn’t fulfill.

Tezmen lashed out on X, saying the group was the target of an organized speculative attack. He would later tell prosecutors that no financial institution could have survived withdrawals on that scale. He blamed panic triggered by the regulator’s new rules and rejected the suggestion that the extraordinary rise in Tera-related companies was artificial.

Pusula’s chairman, Muhammed Yariz, later denied allegations that he fled the country. In a post on X, he said he visited the prosecutor’s office on his own free will. He has since been charged with allegations of market manipulation and fraud, and is in jail pending trial. Calls to Pusula's main line were not answered. ‘Greedy Parasites’By the time the news reached Erdogan, the market crisis was also a political one. In September, the president convened an emergency meeting with his economy team, shouting at ministers for letting problems spin out of control, according to a person with knowledge of the matter.

Authorities moved fast to limit the fallout, unveiling a wave of measures, such as compensation for small investors and a fund to claw back ill-gotten gains. The vice president was put in charge of a board to oversee the liquidation of more than 100 funds holding some $20 billion, while Simsek took to the airwaves to reassure citizens there was no systemic risk. In a speech, Erdogan vowed to cleanse markets of “greedy parasites.”While those measures have stabilized Turkey’s stock market, local fund managers are wary of jumping back in and MSCI has signaled it’s not backing down.

The index provider, whose guidelines are tracked by the biggest institutional investors, said last week that without “credible and sustained” enforcement against coordinated trading, it will consider stripping the country of its emerging market status. This week, Erdogan removed the chief markets regulator.

“The whole issue has dented confidence,” said Simon Quijano-Evans, a senior emerging market strategist at Macro Hive in London. “Given a fund crisis of these proportions was allowed to happen in pure daylight, it just raises unnecessary questions.”For Basak, the Tera critic, the whole episode is a reflection of the broader climate in Turkey, one in which people are often afraid to speak out when they detect flaws in public policy. “My friends now frequently tell me to be careful,” he said.

Undaunted, Basak has become more, not less vocal. He's all over local media, calling out what he sees as a failure by regulators and pressing, again and again, for the release of information about who knew what and who profited from the wild rally before it all blew up.