Fund Loss Lawsuits: Competent Court and the Duty to Inform, With Examples From Court Decisions

Two of the first questions facing investors who suffered losses in investment funds are: which court should the case be filed in? and did the institution that sold the fund adequately inform the investor? Court decisions give different answers, so the outcome depends on the file. This article gives a general framework and decision examples. It does not replace an assessment of your specific case and does not predict any result. For remedies and sample petitions, see our fund liquidation guide.

1. Is the investor a "consumer"?

Under the Consumer Protection Law No. 6502, a consumer is a person acting for purposes outside commercial or professional activity (Art. 3). The Law also covers distance contracts for financial services (Art. 49). Whether a transaction is a consumer transaction depends on the other party acting commercially and the investor acting for the opposite kind of purpose.

It is debated whether an investor's profit motive alone removes consumer status. Two tendencies appear in decisions:

• Decisions treating the transaction as a consumer transaction: a non-merchant individual investor using a financial service to manage savings is treated as a consumer, and the profit motive alone does not change this (Istanbul 6th Commercial Court, 2022/820, 2023/189; Istanbul Regional Court 13th Civil Chamber, 2024/848, 2024/1503; Adana Regional Court 4th Civil Chamber, 2024/84, 2024/156).
• Decisions treating it as a commercial matter: investors carrying out high-risk or leveraged transactions for investment have been found to act for commercial purposes, so commercial courts are competent (Istanbul Regional Court 44th Civil Chamber, 2023/1121, 2025/1657; 37th Civil Chamber, 2025/1225, 2025/2796).

These decisions concern different types of transactions (account management, futures and options, leveraged trading). Which approach applies to a case about an investment fund depends on the nature of the transaction, the investor's profile, volume and the contract terms.

2. Practical consequences of the competent court

• For a consumer transaction, the case is filed before consumer courts; applying to a mediator first is a precondition, subject to statutory exceptions (Law No. 6502, Art. 73/A).
• For a commercial case, mediation is also a precondition for monetary claims and compensation claims (Commercial Code Art. 5/A).
• Filing in the wrong court risks a decision of lack of jurisdiction and lost time, so the nature of the relationship must be assessed carefully at the start.

3. Duty to inform and to act in the investor's interest

Portfolio management companies must act in the interest of the funds they manage and the unit holders (Capital Markets Law Art. 55/6). The bank or brokerage that sells a fund must inform the investor about risks and assess the product's suitability to the investor's profile. Courts review this on the documents in the file. Examples:

• Signed fund request form: the Court of Cassation's 11th Civil Chamber, in one decision, reversed a judgment granting a claim, noting that the fund request form signed by the claimant stated that entering the fund mid-period could cause a loss of principal at maturity, and that loss on early redemption should be known in the ordinary course of life (2013/11663, 2014/1583).
• Individual investor's knowledge and information: in one file the first-instance court held that the claimant, as an individual investor, had the necessary knowledge and was informed of likely risks, so the defendant could not be held liable for losses from buying and selling the fund; the claim against the managing company was dismissed for lack of standing (the first-instance reasoning cited in Court of Cassation 11th Civil Chamber, 2019/4445, 2021/3866).
• Contributory fault: in one first-instance decision, contributory fault was found at fifty percent in transactions concerning foreign funds and part of the loss was attributed to the bank (Istanbul 5th Commercial Court, 2013/363, 2019/1297). The Code of Obligations allows the judge to reduce compensation where the injured party contributed to the loss (Art. 52).

These examples show that information is assessed together with written documents and guidance given at the time of the transaction. Each decision turns on its facts, and the same result cannot be assumed in another case.

4. What matters in the file

• The contract, risk disclosure and investor profile forms and the answers given.
• The fund prospectus, investor information form and fund rules.
• Correspondence, messages and call records before and after the sale.
• Account statements, transaction dates and amounts invested.
• Data showing any difference between the fund's stated strategy and its actual management, which often arises in expert reports.

5. Time limits

In tort, the general limitation period is two years from learning of the loss and the liable party, and ten years from the act in any case (Code of Obligations Art. 72); different periods may apply to contractual claims. Where mediation is a precondition, limitation is suspended from the application to the mediation bureau until the final report (Mediation Law Art. 18/A/15). Because periods vary, an early assessment is important.

6. What to do

Keep your documents, follow official announcements and do not miss time limits. If you would like your file assessed with its documents, you can create an appointment or reach us via the contact page.

This article is for general information only, contains no promise of results and is not legal advice. The decisions mentioned are examples only; each case is assessed on its own facts.