Slander and speculation no longer a stock market crime

New capital markets law amendment being proposed, makes it difficult to prosecute speculative news. Critics slam the bill as detrimental to Turkey’s image.

Publishing speculative, or manipulative rumors in an effort to influence capital market prices, values, or decisions of investors, is no longer a crime on its own. A new amendment in the Capital Markets Law requires that such news stories to have provided benefit for the publisher, or a related third party, in order for the offense be considered a crime.

Speculation and manipulation apply to Article 107/2 of the capital markets law which formerly read; “Any person who provides or disseminates information, spreads rumors, gives news or prepares reports that are misleading, false or deceiving, with an aim to influence the value or price of capital market instruments or investors' decisions shall be imprisoned from two to five years and fined juridical up to five thousand days.”

The proposed revision states “…with an aim to influence the value or price of capital market instruments or investors' decisions, in an effort to directly or indirectly benefit for itself or a third party, shall be imprisoned from three to five years and fined juridical up to five thousand days.”

Crimes committed against Bank Asya pardoned

If approved, the law would pave way for more speculative news stories. One recent example of such a case concerned publicly traded Bank Asya, which had become an open target of the President Recep Tayyip Erdoğan, the ruling Justice and Development Party (AK Party) and pro-government media outlets.

Notably Sabah daily, was at the epicenter of the controversy when it had claimed that the bank might fail and be taken over by the Savings and Deposit Insurance Fund (TMSF) amidst withdrawal of accounts by government institutions, including Turkish Airlines.

Sabah’s reporting was slammed across the board as clear defamation and speculation. Notably, Bank Asya’s capital adequacy ratio was amongst the best in the banking sector, well above the benchmark which would make any takeover by the TMSF impossible and unjustifiable. President Erdoğan also had notoriously declared that the Bank had failed, calling on Turkey’s banking watchdog, the BDDK (Banking Regulation and Supervision Agency) to “to take action”. The statements from Erdoğan in September also constitute to a clear crime.

The new law in effect will pardon Sabah newspaper, and all other offenders, simply on the premise that the paper nor any related party gained financial benefits from the reporter.

The move against the publicly traded was criticized by capital markets experts, opposition party figures from across the board, as 'detrimental to investor confidence in Turkey'. The new law amendment being proposal will be discussed in subcommittee meeting.

Outpour of anger over the proposed changes

The risk the law proposes for the foundation of the banking system was outlined by Republican People’s Party (CHP) delegate Akif Hamzaçebi who noted “it will be impossible to punish a newspaper whose lies which can harm stock performance.”

Ridiculing President Erdoğan’s public attacks on Bank Asya, Hamzaçebi expressed “It is impossible to state that the statements did not have any benefits for the politician who expressed them.” He added “This issue is not just about Bank Asya… this concerns the entire public and the players in the financial world.”

The proposed changes were also viewed as a severe detriment to investor confidence in Turkey, as expressed by CHP Tekirdağ province delegate Faik Öztrak who added “If this amendment is motivated by political attacks against Bank Asya, this indicates that they (the government) simply does not understand how the banking system works…This ignorance will cause Turkey problems”

Nationalist Movement Party (MHP) Antalya delegate Mehmet Günal echoed the wideheld view that the new amendment relates back to Erdoğan’s targeting of Bank Asya. “Falsefully claiming that a bank has failed is a crime…They (the government) are trying to let pro-government media off the hook. I hope the law amendment proposal, will be changed in discussions in the subcommittee.”

Published on BGNNews, 19 January 2015, Monday