‘The Dude’ Draws Regulator Ire With Big Sales After Turkey Quake

Kerim Karakaya and Tugce Ozsoy
·3 min read

(Bloomberg) -- Turkey is seeking more information on trades made by an unknown investor or investors, referred to locally as “the Dude,” during a selloff the day after devastating earthquakes last week.

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Regulators have been investigating transactions made Tuesday via Istanbul brokerage Yatirim Finansman, which has been linked to episodes of unexplained, outsized trading activity since at least 2016, according to people with direct knowledge of the matter. The process is likely to take time given the volume of trades, they said, asking not to be named because the probe is private.

Yatirim Finansman was a net seller of 1.28 billion liras ($68 million) in stocks on Tuesday, more than half of total net sales that day, according to data from Matriks Bilgi. That nearly quadrupled the second-most active net seller, on a day the Turkish index dropped almost 9%, sending it into a technical bear market.

When transactions via Yatirim Finansman from Friday’s rally through Tuesday are included, however, the Istanbul-based brokerage was still a net buyer of 297 million liras of stocks, suggesting that clients were reducing risk after 1.5 billion liras in purchases on Friday alone. On that day, the last trading day before the natural disaster, the index surged 5.2%.

Privacy Rules

Yatirim Finansman’s activity has become the stuff of legend to Istanbul traders. Starting in 2016, it became the talk of the town when locals noticed a series of huge bets steering the direction of the stock market at key times. They started referring to its mystery client or clients, whose identity has never been revealed, as “the Dude.”

Yatirim Finansman told Bloomberg on Monday that as a regulated brokerage, it carries out transactions confidentially on behalf of local and international, individual and institutional investors.

“In line with capital markets regulations, our firm shows maximum sensitivity to the privacy of client information and transactions,” the brokerage said in an emailed statement in response to Bloomberg questions. “As with all buying and selling transactions by our customers, we do not have the ability to intervene in any way in the decision stages for these transactions.”

Trading Halted

Turkey’s stock exchange suspended trading on Feb. 8, two days after the quakes, and canceled transactions executed on that day. Steep losses the two previous days led to criticism that the exchange was too slow to act to prevent losses.

The leader of the main opposition party on Monday called on the heads of the exchange and the Capital Markets Board to resign. Officials are now considering extending the closure of the stock market past its scheduled reopening on Wednesday, Bloomberg reported earlier in the day.

The death toll from the earthquakes, which destroyed significant parts of 10 cities in the nation’s southeast, was approaching 40,000 as of Monday, making it the most deadly natural disaster in modern Turkish history. A local business group has estimated the loss to the economy at over $80 billion.

The Capital Markets Board and Borsa Istanbul declined to comment on any probe into stock-market transactions.

Algorithmic Trading

Yatirim Finansman’s former chief executive officer, Seniz Yarcan, provided some insight into the trades in 2016, telling business newspaper Dunya that the abnormally large trades were “not an investor, but a big, new fund investor profile that trades with algorithms.”

The Borsa Istanbul opened up to such algorithmic and high-frequency traders after it moved to the Nasdaq system in Nov. 2015 with a technology upgrade, Yarcan said at the time.

(Updates with opposition call, market closure debate, in fifth paragraph from end.)

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