Can Investors Sue SPK for Forex Losses? Council of State Ruling

Can an investor who has lost money in leveraged trading look for the person responsible not only in the brokerage firm, but also in the public authority that regulates and supervises the market? In administrative courts the answer to this question takes the form of a full remedy action: the investor argues that the Capital Markets Board (SPK) did not regulate the forex market in a way that protects investors and did not supervise intermediary institutions in time, and asks the administration to compensate the loss. In the case examined by the 13th Chamber of the Council of State (Danıştay), this claim failed at all three levels; the decision also contains a procedural finding on the period within which a party that missed the appeal deadline can still exercise the right of appeal through its response petition.

In its decision of 23.10.2024, Docket No. (E.) 2020/3081, Decision No. (K.) 2024/4243, the 13th Chamber of the Council of State affirmed unanimously and finally the regional administrative court decision that had rejected the appeal against the dismissal of a claim for TL 380,000.00 in material damages based on the Board's service fault; it rejected as out of time the Board's appeal concerning the attorney's fee.

💱 The investor's claim: TL 380,000 and service fault

The claimant opened an account with an authorised institution in order to invest in the leveraged trading market and suffered a loss as a result of the transactions. The case was brought not against the intermediary institution but against the Capital Markets Board. The core of the argument is that a public service was run badly:

On these grounds, payment of TL 380,000.00 in material damages with statutory interest was requested. The claimant's request for legal aid was accepted by the administrative court.

📉 The administrative court: the risk was knowingly assumed

The administrative court first set out the regulatory history of the market. According to the decision, until 2011 leveraged transactions were carried out under the market's own rules, without any oversight or supervision. After complaints, a communiqué on leveraged trading transactions was issued under the repealed Capital Markets Law No. 2499, and with a press release dated 31.08.2011 the Board announced that these transactions could be carried out only by institutions it had authorised.

The court explained that the Board did not remain inactive after that date, on the basis of the following facts:

According to the court, it is clear that the claimant suffered a loss; however, the loss arose largely from the realisation of a risk that is inherent in the transactions and that was known to the claimant from the very beginning. Because the loss could not be said to result from the administration's services failing to function, functioning late or functioning badly, no adequate causal link could be established between the administration's actions and the loss. The court also pointed out that, in the same period and in the same market, there were people and institutions that traded and obtained the benefit they hoped for.

The claim was dismissed, and a fixed attorney's fee of TL 1,362.00 was ordered to be collected from the claimant and given to the administration. The regional administrative court rejected the parties' appeal applications under Article 45/3 of the Administrative Procedure Law No. 2577.

🗂️ Grounds raised on appeal

In the appeal petition, the claimant tried to prove the service fault through general market conditions. The main allegations reflected in the text of the decision are as follows:

In its defence, the Board stated that the necessary regulations had been made, that investors are responsible for their investment decisions and the applications they use, and that leveraged transactions were inspected more frequently. The Board also argued that, in a case concerning money, a proportional rather than a fixed attorney's fee should have been ordered, and requested that the decision be affirmed with a correction.

🏛️ The Council of State: affirmed as to the claimant

The 13th Chamber of the Council of State made a short assessment of the claimant's appeal request. A regional administrative court decision can be reversed only if one of the grounds listed in Article 49 of Law No. 2577 exists. The Chamber stated that the decision under appeal complied with procedure and law and that the grounds in the appeal petition were not of a kind requiring reversal, and it affirmed the decision.

The Chamber did not separately repeat the first-instance court's reasoning on the causal link; however, as a result of the affirmation, the judgment dismissing the case became final. The reporting judge also gave an opinion in favour of rejecting the claimant's appeal request and affirming the decision.

⏳ The Board's appeal: the response petition and 30 days

The second limb of the decision is procedural. The Board did not appeal the regional administrative court decision within its own appeal period; it raised its objection to the attorney's fee together with its response to the claimant's appeal. The Chamber examined this request on the basis of two provisions:

In the case, the claimant's appeal petition reached the Board's electronic notification address on 12.08.2020 and was deemed notified at the end of the following fifth day, on 17.08.2020. The Board's response petition containing its appeal request entered the court records on 23.09.2020. This application, made after the thirty-day response period had passed, was not examined because it was out of time. The provision on the fixed attorney's fee was therefore also left unchanged.

This finding shows that the possibility in Article 48/3, similar to a "joinder appeal", is not unlimited: a party that missed the main appeal period may request review depending on the other party's appeal, but it can do so only within the response period that runs from the notification made to it.

🔎 What the decision says and what it does not

The decision shows that, in compensation claims directed at the regulatory authority for forex losses, the causal link is decisive. According to the first-instance court's approach, where the investor was given a risk disclosure and the market has been placed under a licensing and supervision regime since 2011, the loss is regarded as arising from market risk. While affirming this assessment, the Chamber did not set out a detailed statement of principle.

On the other hand, the scope of the decision is narrow. The dispute concerns market risk in an account opened with an authorised institution; unauthorised platforms, fake accounts or conduct by the intermediary institution in breach of contract were not discussed. In civil cases brought against an intermediary institution, liability is assessed under different criteria; for example, the decision on loss exceeding the collateral in leveraged tradingTR can be consulted.

A different example of a full remedy action against the Board is the decision on a service fault claim against SPKTR, which concerns liability alleged because of a prospectus approval. For an example of the sanctions the Board applies to forex intermediary institutions, the decision on the demo account obligationTR can be examined.

❓ Frequently asked questions

For detailed information and legal support, you can contact Savun Law & Consultancy. Contact details are on the contact page; other decisions on leveraged trading and capital markets disputes can be followed on the Precedent DecisionsTR page.