Introduction
Insider trading under Turkish Capital Market Law is one of the most serious capital market offences in Turkey. In Turkish legal terminology, insider trading is generally referred to as “bilgi suistimali”, meaning the abuse or misuse of inside information. The concept protects market fairness by preventing persons who possess non-public, price-sensitive information from using that information to trade capital market instruments or obtain an unlawful advantage.
Capital markets operate on trust. Investors buy and sell securities based on publicly available information, financial disclosures, market expectations and risk assessment. If certain persons trade before material information is disclosed to the public, they gain an unfair advantage over ordinary investors. This damages confidence in the market, distorts price formation and undermines the principle of equal access to information.
In Turkey, insider trading is regulated primarily under Article 106 of Capital Markets Law No. 6362. The provision penalizes persons who, directly or indirectly, rely on non-public information about capital market instruments or issuers that may affect prices, values or investor decisions and who place, change or cancel buy or sell orders for the relevant instruments and thereby obtain a benefit for themselves or another person. Article 106 also identifies the categories of persons who may commit this offence and provides imprisonment from three to five years or judicial fine, with a special rule that any judicial fine cannot be less than twice the benefit obtained.
For investors, issuers, directors, employees, brokerage firms, portfolio managers, auditors, lawyers, consultants and public companies, understanding insider trading rules is essential. A person does not need to be a board member to face insider trading liability. Employees, shareholders, professionals, third parties who obtained information through crime, and persons who knew or should have known the nature of the information may also fall within the scope of Article 106.
Legal Framework of Insider Trading in Turkey
The main legal source for insider trading in Turkey is Capital Markets Law No. 6362. Article 106 regulates the offence of information abuse, while Article 107 regulates market manipulation. These provisions are supported by secondary regulations and CMB measures, including the Communiqué on Measures to Be Taken in Insider Trading and Market Manipulation Investigations V-101.1, the Communiqué on Obligation of Notification Regarding Insider Trading or Market Manipulation Crimes V-102.1, and the Market Abuse Communiqué VI-104.1.
The Capital Markets Board of Türkiye announced that the V-101.1 Communiqué was prepared within the framework of Capital Markets Law No. 6362 and that its purpose is to ensure the effective and healthy functioning of the market by enabling necessary measures where there is reasonable suspicion that insider trading or market manipulation offences under Articles 106 and 107 have been committed, or where such acts are detected.
The CMB also announced that the V-102.1 Communiqué regulates notifications to be made regarding insider trading and market manipulation crimes defined in the law. According to the announcement, investment institutions are required to notify the CMB of suspicious transactions they encounter during their activities within five business days, and the notification rules operate separately from suspicious transaction obligations under anti-money laundering legislation.
This framework shows that Turkish insider trading law is not limited to criminal punishment after the offence is completed. It also includes preventive measures, suspicious transaction reporting, trading bans, trading restrictions, market surveillance and administrative mechanisms aimed at protecting investors and preserving fair market functioning.
What Is Inside Information?
Inside information is non-public information that may affect the price or value of capital market instruments or investors’ investment decisions. Article 106 refers to information that is not yet disclosed to the public and that is capable of affecting the prices or values of capital market instruments or investor decisions.
In practice, inside information may include many types of material developments. Examples may include unpublished financial results, merger or acquisition negotiations, capital increase decisions, major litigation outcomes, regulatory approvals, public tender results, dividend decisions, significant contracts, debt restructuring, bankruptcy risk, audit findings, related-party transactions, cyber incidents, major production interruptions, asset sales, takeover bids, share buybacks, management changes or undisclosed investment plans.
The decisive point is not whether the information is “secret” in an ordinary sense. The decisive point is whether it is non-public, material and capable of affecting the relevant capital market instrument or investor decisions. A rumor may not automatically be inside information, but confirmed internal information regarding a material event may be inside information even before it is formally disclosed.
For public companies, inside information must be managed with strict confidentiality until proper disclosure is made through the required channels. Directors, executives, employees and advisors should not trade while in possession of such information. They should also not pass it to relatives, friends, business partners or other investors.
Elements of Insider Trading Under Article 106
The offence under Article 106 has several important elements. First, there must be information about capital market instruments or issuers. Second, the information must be non-public. Third, it must be capable of affecting the price, value or investment decisions concerning the relevant instruments. Fourth, the person must rely on that information when placing a buy or sell order, changing an order or cancelling an order. Fifth, the person must obtain a benefit for themselves or another person.
This structure is important because insider trading is not simply “knowing something” about a company. Mere possession of inside information is not enough by itself. The offence is completed when the person uses the information in a prohibited way by trading, changing an order or cancelling an order and obtaining benefit.
The order-related wording is also significant. Liability may arise not only when a person buys or sells securities but also where the person changes or cancels an order based on inside information. For example, if an investor had previously placed a buy order but cancels it after receiving undisclosed negative information, this may be relevant under the statutory wording if the other elements are present.
Benefit is another critical element. The law refers to obtaining a benefit for oneself or another person. This benefit may be direct or indirect. It may consist of profit, avoidance of loss, advantage for a relative, benefit for a company, or another economic gain connected with the transaction.
Persons Who May Commit Insider Trading
Article 106 identifies several categories of persons. These include managers of issuers or their subsidiaries or controlling companies, persons who possess information due to shareholding in issuers or their related companies, persons who possess information because of their work, profession or duties, persons who obtained the information by committing a crime, and persons who knew or, if proven, should have known that the information had the nature described in the provision.
This list is broad. Insider trading liability is not limited to directors or senior executives. The following persons may be exposed to risk depending on the facts:
Company directors, board members and executives may have access to financial results, strategic transactions and corporate decisions before disclosure. Employees may learn material information through internal meetings, accounting records, operational reports or IT systems. Lawyers, auditors, tax advisors, consultants, investment bankers and public relations advisors may receive non-public information while performing professional duties. Shareholders may receive non-public information through their relationship with the issuer. Persons who hack systems, steal documents or obtain information unlawfully may also fall within the scope. Even a person outside the company may be liable if they knew or should have known that the information was non-public and material.
This broad approach prevents insiders from avoiding liability by transferring information to others. If a director tells a relative about an upcoming merger and the relative trades with knowledge of the non-public nature of the information, liability risk may arise. Likewise, if a professional advisor shares confidential information with a friend who trades before disclosure, the transaction may be examined under insider trading rules.
Insider Trading and Public Companies
Public companies are at the center of insider trading risk because their shares and other capital market instruments may be traded by the public. Any undisclosed material development regarding a public company may affect the market price. Therefore, public companies must maintain strong internal policies for inside information.
A public company should identify who has access to inside information, restrict access to those who need to know, maintain confidentiality, train employees, regulate trading by insiders and ensure timely public disclosure when required. It should also monitor whether directors, executives or employees trade before material disclosures.
Examples of high-risk periods include the days before financial statement publication, merger announcements, capital increase decisions, dividend announcements, important contract disclosures, regulatory approvals, tender results and major litigation outcomes. If insiders trade during these periods, the CMB may examine whether they used non-public information.
Public companies should also be careful with selective disclosure. Sharing material information with a limited group of investors, analysts or business partners before public disclosure may create both disclosure and insider trading risks. Once information is material, the correct route is regulated public disclosure, not informal communication.
Insider Trading and KAP Disclosures
In Turkish capital markets, public disclosure is generally made through the Public Disclosure Platform, known as KAP. KAP is the central system for financial statements, material event disclosures and other regulated announcements by public companies. Insider trading risk frequently arises when transactions occur shortly before KAP announcements.
For example, if a material positive announcement is made at 18:00 and certain persons bought shares shortly before the disclosure, regulators may examine whether those persons had access to the information before it became public. Similarly, if negative information is disclosed after market close and certain persons sold shares before disclosure, this may create suspicion.
The timing of trades is therefore critical. In insider trading investigations, the CMB may review the chronology of information creation, internal approvals, access logs, e-mails, board meetings, disclosure drafts and trading records. The issue is not only whether the person had formal access but whether they actually knew or should have known the information.
For companies, this means disclosure processes must be well documented. The company should be able to show when the information emerged, who knew it, when it became material, when the disclosure decision was made and when the KAP announcement was published.
Criminal Sanctions for Insider Trading
Article 106 provides that persons who commit insider trading may be punished with imprisonment from three to five years or judicial fine. However, if a judicial fine is imposed, it cannot be less than twice the benefit obtained through the offence.
This sanction structure is severe. It confirms that insider trading is treated as a capital market crime, not only as an administrative violation. Depending on the evidence, the CMB may file a criminal complaint and the public prosecutor may initiate an investigation. If charges are brought, the matter may proceed before the criminal courts.
The minimum-benefit rule for judicial fines has a strong deterrent purpose. Insider trading is often committed for financial gain. If the fine were lower than the unlawful gain, the legal system would fail to deter the conduct. By linking the judicial fine to the benefit, the law aims to remove the economic incentive for insider trading.
Criminal proceedings may also have broader consequences. A person accused of insider trading may face reputational damage, professional consequences, restrictions in financial markets and difficulty working in regulated institutions. Companies may also suffer reputational harm if their directors or employees are involved.
CMB Measures and Trading Bans
Insider trading investigations may trigger CMB measures even before a final criminal judgment. The V-101.1 Communiqué allows the CMB to take measures when there is reasonable suspicion that insider trading or market manipulation has occurred, or when such acts are detected. The CMB’s announcement lists measures such as trading bans, gross settlement on an investor or instrument basis, restrictions on margin trading, short selling and lending transactions, position limits, collateral obligations, pre-deposit requirements, temporary suspension of trading, limitation of market data distribution, changes to market or trading principles and restrictions on order transmission channels.
The same CMB announcement states that where suspicion arises regarding acts under Articles 106 and 107, a six-month trading ban may be imposed. If, after examination, the CMB decides to file a criminal complaint with the public prosecutor, a temporary trading ban of two years may be applied. It also states that if a person subject to a trading ban uses other persons’ accounts during the ban to commit acts under Articles 106 and 107 and the CMB files a criminal complaint under Article 115, a five-year continuous trading ban may be imposed.
These measures are highly important in practice. A trading ban can prevent a person from trading on exchanges and organized markets. It may affect professional investors, executives, portfolio managers and individuals who depend on market access. Attempting to bypass a ban through relatives, friends or nominee accounts may worsen the legal position.
Suspicious Transaction Reporting by Investment Institutions
Investment institutions play a gatekeeping role in insider trading prevention. The V-102.1 Communiqué regulates notification obligations regarding insider trading and market manipulation. The CMB announcement states that investment institutions must notify the CMB of suspicious transactions encountered during their activities within five business days.
This obligation is significant because brokerage firms and investment institutions are often the first to observe unusual trading. They may detect trading shortly before announcements, coordinated transactions, suspicious order changes, transactions by persons close to insiders, or activity inconsistent with a client’s ordinary profile.
The notification obligation does not replace anti-money laundering suspicious transaction reporting. The CMB announcement expressly states that notification under the capital market rules does not remove obligations under Law No. 5549 and related MASAK legislation, and that MASAK suspicious transaction reporting does not remove the notification obligation under the CMB framework.
For investment institutions, this means compliance systems must be designed to detect both market abuse risk and AML risk. Failure to report suspicious transactions may create regulatory exposure for the institution.
Insider Trading and Market Abuse
Insider trading is closely connected to broader market abuse rules. The Market Abuse Communiqué VI-104.1 identifies acts that may disturb the safe, transparent and stable operation of exchanges and organized markets. The CMB stated that this communiqué was prepared under Article 104 of Capital Markets Law No. 6362 and classifies market abuse actions into four categories: acts relating to inside or continuous information, acts relating to orders or transactions, acts committed through communication or news, and other market abuse actions.
This distinction is important. Not every conduct involving inside information necessarily results in a criminal conviction under Article 106. However, conduct may still be treated as a market abuse action and may lead to administrative sanctions where it disrupts market integrity.
For example, failing to maintain confidentiality of inside information, disclosing information selectively, giving misleading impressions around disclosure timing or acting in a way that affects market integrity may trigger CMB scrutiny even if the elements of Article 106 are disputed.
In practice, insider trading cases often involve both criminal and administrative dimensions. A person may face criminal investigation under Article 106, trading bans under CMB measures, administrative sanctions for market abuse and potential civil claims by investors.
Insider Trading and Tipping
One of the most common insider trading scenarios involves “tipping,” meaning the transfer of inside information to another person who trades. Turkish Article 106 focuses on persons who use non-public material information to place, change or cancel orders and obtain benefit. However, the transferor of information may also face liability depending on the facts, especially if the transfer forms part of the unlawful conduct, breach of confidentiality, market abuse or aiding conduct.
Consider a board member who learns that the company will announce a major acquisition. Before public disclosure, the board member informs a relative. The relative purchases shares and makes a profit after the KAP announcement. Even if the board member did not personally trade, the facts may trigger serious legal scrutiny for both the trader and the person who leaked the information.
Similarly, if an auditor, lawyer or investment banker shares confidential information with a third party who trades, the professional may face disciplinary, civil and criminal risk depending on involvement, intent and benefit. Professional confidentiality obligations also become relevant.
The safest rule is simple: inside information must not be shared except where disclosure is necessary for legitimate professional duties and subject to confidentiality controls.
Insider Trading and Avoidance of Loss
Insider trading is not limited to making profit from buying before good news. It may also involve avoiding loss by selling before bad news. Article 106 refers to obtaining a benefit for oneself or another person, and benefit may include avoiding a loss.
For example, if an executive learns that the company will announce a major loss, regulatory penalty, failed tender, debt default or negative court decision and sells shares before public disclosure, this may be examined as insider trading. The same applies if the person cancels a previous buy order or changes an order based on that information.
Avoidance-of-loss cases are important because defendants may argue that they did not make a profit. However, avoiding a foreseeable loss can be an economic benefit. The legal analysis should therefore examine the person’s position before and after the transaction, the timing of disclosure and the amount of loss avoided.
Insider Trading by Professionals
Professionals who advise public companies are often exposed to inside information. Lawyers may learn about mergers, litigation, regulatory investigations or capital increases. Auditors may review financial results before publication. Investment bankers may structure public offerings or takeover bids. Consultants may participate in strategic projects. Public relations firms may draft announcements before disclosure.
These professionals must implement strict confidentiality measures. They should limit information access within their teams, avoid trading in relevant securities, maintain internal watch lists, use conflict checks and train employees. Law firms, audit firms and advisory companies should have internal policies preventing misuse of client information.
Professional duties may also create evidence. Engagement letters, confidentiality agreements, data room logs, e-mail records and meeting minutes may show who had access to inside information. In an investigation, regulators may examine whether a suspicious trader was connected to a professional advisor or someone in that advisor’s network.
Insider Trading by Employees
Employees of public companies may have access to inside information even if they are not senior executives. Accounting employees may know financial results. IT employees may access internal files. Human resources staff may learn about executive changes. Sales teams may know major contract developments. Legal departments may know litigation risks.
Companies should therefore avoid limiting compliance training only to directors. Insider trading policies should apply to all employees who may access material non-public information. Training should explain what inside information is, when trading is prohibited, how blackout periods work and what employees should do if they accidentally receive sensitive information.
Employee trading policies should also address relatives and related accounts. A person may not avoid suspicion by trading through a spouse, sibling, parent, child or close friend. The use of third-party accounts may be examined carefully in insider trading investigations.
Insider Trading and Relatives
Trading through relatives is a classic insider trading risk. If a person with inside information does not trade personally but causes or enables a relative to trade, the investigation may focus on communication, timing, account history and benefit.
Regulators may examine whether the relative had previous trading experience, whether the trade was unusual compared to past behavior, whether there was contact between the insider and the relative before the transaction, whether the relative had independent reasons for the trade and whether the insider indirectly benefited.
For example, if a person who never previously traded a particular share suddenly buys shortly before a material disclosure after speaking with a company insider, this may create suspicion. The fact that the trading account is not in the insider’s name does not automatically eliminate liability.
Evidence in Insider Trading Investigations
Insider trading investigations are evidence-intensive. The CMB, prosecutors and courts may examine trading records, order times, KAP announcement times, internal company records, e-mails, phone traffic, messaging records, account movements, beneficial ownership, bank transfers, professional relationships and communication patterns.
The chronology is critical. Investigators try to determine when the information became material, who learned it, when the trader acted and when the information became public. If the trade occurs shortly before disclosure and the trader has a connection to an insider, suspicion increases.
However, suspicious timing alone may not always prove insider trading. Defenses may include independent investment analysis, pre-existing trading strategy, public information, ordinary portfolio rebalancing, lack of access to information, absence of benefit or lack of knowledge that the information was non-public and material. Each case must be assessed on its own evidence.
Defenses in Insider Trading Cases
A person accused of insider trading may raise several defenses depending on the facts. The person may argue that the information was already public, that it was not material, that the trade was not based on the information, that there was no benefit, that the person had no access to the information, that the transaction was part of a pre-existing plan, or that the order was made for unrelated reasons.
For example, if an investor bought shares based on public financial data and analyst reports before a positive announcement, this may be different from trading based on confidential board information. Similarly, if an order was placed before the person obtained the information, insider trading may be difficult to establish unless the order was later changed or not cancelled based on inside information.
The defense should be supported by documents. Trading history, research notes, portfolio strategy, timing records, public disclosures and communication evidence may be important. In insider trading cases, unsupported explanations are usually weak.
Compliance Obligations for Public Companies
Public companies should maintain a comprehensive insider trading compliance program. This program should include an inside information policy, confidentiality procedures, insider lists, blackout periods, disclosure committees, trading approval mechanisms, employee training, advisor confidentiality agreements and crisis protocols.
Blackout periods are especially useful around financial reporting and material corporate events. Directors, executives and certain employees may be restricted from trading before financial results or major announcements. Pre-clearance procedures may require insiders to obtain approval before trading company securities.
The company should also keep records of who accessed material information. Data room logs, meeting participants, document circulation records and e-mail distribution lists may be important if suspicious trading occurs.
Compliance Obligations for Investment Institutions
Investment institutions must monitor suspicious transactions and report them when required. They should maintain surveillance systems for unusual trading before disclosures, related account activity, sudden changes in customer behavior and transactions by customers connected to issuers.
Customer representatives should be trained to identify warning signs. If a customer claims to have “inside information,” insists on urgent trading before an announcement or trades unusually in a company connected to their employment or relationship network, the institution should escalate the matter internally.
Investment institutions should also preserve records. Order logs, phone recordings, electronic communications and customer files may become decisive evidence in an investigation.
Practical Advice for Investors
Investors should never trade based on non-public material information received from insiders, employees, relatives, friends, advisors or social media groups. Claims such as “I heard good news will be announced,” “the financials will be strong,” “a merger will be disclosed tomorrow” or “bad news is coming, sell now” may create serious legal risk.
Investors should rely on official public disclosures, financial statements, KAP announcements and licensed investment advice. If they receive inside information accidentally, they should avoid trading and should consider seeking legal advice, especially if they are connected to the issuer.
Investors should also be careful when participating in online investment groups. Some groups may combine insider tips, rumors and manipulation. Even forwarding non-public information may create risk if it contributes to unlawful trading or market abuse.
Civil Liability and Investor Claims
Insider trading may harm ordinary investors who traded without equal access to information. Depending on the facts, investors who suffer losses may seek compensation. However, civil claims in insider trading cases can be complex because the investor must establish damage, causation and the connection between the unlawful conduct and the loss.
CMB findings, criminal files, expert reports, trading data and public disclosure chronology may support civil claims. Investors should preserve transaction records, account statements and screenshots of relevant information.
Civil liability may be pursued alongside criminal and administrative processes, but each route has different standards and purposes. Criminal proceedings punish the offence, administrative measures protect the market, and civil claims aim to compensate loss.
Insider Trading and Market Confidence
The policy reason behind insider trading prohibition is market confidence. If investors believe that insiders always trade before public announcements, they may withdraw from the market or demand a higher risk premium. This reduces liquidity, increases the cost of capital and damages public offerings.
A fair market requires that material information be disclosed publicly before investors trade on it. Insider trading undermines this principle. It rewards access rather than analysis. It harms investors who comply with the rules and rely on public information.
For companies, preventing insider trading is also a reputation issue. A public company associated with insider trading allegations may lose investor trust even if the company itself is not ultimately sanctioned. Therefore, compliance is both a legal and commercial necessity.
Conclusion
Insider trading under Turkish Capital Market Law is regulated mainly under Article 106 of Capital Markets Law No. 6362. The offence concerns trading, changing orders or cancelling orders based on non-public information about capital market instruments or issuers where that information may affect prices, values or investor decisions and where the person obtains a benefit for themselves or another person. The law applies broadly to managers, shareholders, professionals, persons who obtained information through crime and persons who knew or should have known the nature of the information.
The consequences are severe. Insider trading may result in imprisonment from three to five years or judicial fine, and the judicial fine cannot be less than twice the benefit obtained. In addition, the CMB may impose trading bans and other market measures where there is suspicion or detection of insider trading or market manipulation.
Public companies must manage inside information carefully, disclose material developments properly and prevent selective disclosure. Investment institutions must monitor suspicious transactions and notify the CMB within the required framework. Professionals, employees, directors and investors must avoid trading while in possession of inside information.
In conclusion, insider trading law in Turkey is not merely a technical securities rule. It is a fundamental protection for market fairness, investor confidence and equal access to information. Any person or institution facing an insider trading investigation, CMB inquiry, trading ban, suspicious transaction review or criminal complaint should obtain professional legal advice immediately, because timing, evidence, trading chronology and procedural strategy may determine the outcome of the case.
Yanıt yok