THIS IS NOT FINANCIAL ADVICE, why?

What Does Providing Financial Advice Mean?

What is Financial Advice?

(As defined under the Capital Markets Law “CML” Articles 38 and 39)Financial advice refers to activities that directly influence an investor’s financial decisions through personal recommendations. Such advice is typically specific and tailored to the individual investor. It involves providing guidance on financial instruments (e.g., stocks, cryptocurrencies, bonds, etc.) and is personalized based on the financial interests of the investor.

What is General Information?

(Regulation on Investment Services and Activities, Article 66)General information comprises non-personalized explanations addressed to investors or the general public about markets and financial products. Such information does not qualify as personal financial advice. The provider of general information does not issue specific recommendations to any particular investor but instead shares insights about the overall market situation, economic developments, and financial products.

WHO IS AUTHORIZED TO PROVIDE FINANCIAL ADVICE?

Entities and individuals authorized to provide financial advice are regulated under the Capital Markets Law (CML) and the Regulation on Investment Services and Activities and Ancillary Services. According to these regulations, there are three types of authorized parties:

1. Capital Market Institutions

   Brokerage firms, portfolio management companies, and investment trusts that have obtained authorization from the Capital Markets Board (CMB) may offer financial advisory services.

   
   

2. Individuals Licensed in Financial Advisory

   Professionals employed by capital market institutions who hold the Advanced Level Capital Markets Activities License and the Financial Advisory License are authorized to provide financial advice.

   
   

3. Banks Operating in the Capital Markets

   Banks authorized by the CMB may also engage in financial advisory services. However, such services are exclusively provided to their investment clients.

   
   

   
   

LEGAL IMPLICATIONS OF FINANCIAL-RELATED SHARING ON SOCIAL MEDIA

Trading and Sharing Methods of Social Media Users

As we commonly observe, numerous individuals, especially on platforms like Twitter and YouTube, engage in manipulative economic commentary, copy trading, and pumping-dumping activities without possessing any qualifications or licenses.

• Copy trading refers to a strategy where users replicate the trades of other individuals or bots using automated systems, typically managed through shared capital pools.

• Pumping-dumping involves coordinated and simultaneous buy-sell activities for a specific asset in the market.

Although such individuals often include disclaimers like "this is not financial advice," this phrase alone does not act as a safeguard and does not always protect investors. Simply sharing one's own trades and knowing that followers imitate these trades may not always be considered "general information." Such activities can be seen as an abuse or circumvention of the law.

MARKET MANIPULATION

What is Meant by "Manipulation" in Market Manipulation?As defined under Article 107 of the Capital Markets Law (CML), a Market Manipulator is:

“Anyone who engages in transactions such as buying or selling, placing, canceling, or altering orders, or executing account movements that create a false or misleading impression regarding the prices, changes in prices, supply, or demand of capital market instruments, or disseminates false, misleading, or incorrect information, rumors, or comments with the intent to affect the value or decisions of investors concerning these instruments, thereby securing undue benefit.”

Regulations clearly indicate that market manipulation involves highly nuanced boundaries. Activities benefiting oneself, the market, or a third party by conducting or disseminating misleading transactions, spreading rumors, and subsequently appending a disclaimer such as "This is not financial advice," do not absolve such actions from liability or eliminate the risk of legal sanctions.

WHAT ARE THE SANCTIONS?

In Turkey, sanctions for market manipulation and unauthorized financial advice fall under the supervision of the Capital Markets Board (CMB), in addition to relevant provisions of the Turkish Penal Code. Key sanctions include:

1. Article 107: Market Fraud

Commonly known as Market and Price Manipulation, this offense is punishable by 3 to 5 years of imprisonment. Additionally, even under leniency provisions, the offender must pay an amount not less than 500,000 TRY or twice the unlawful gain to the treasury.

2. Article 109: Unauthorized Public Offering and Unlicensed Capital Market Activities

This article penalizes those engaged in unauthorized public offerings or unlicensed activities in the capital markets. Penalty: 2 to 5 years of imprisonment.Amendment (June 2024): Article 109/A extended the scope of sanctions to include unauthorized "Crypto Asset Service Provision" activities, with penalties of 3 to 5 years of imprisonment.

3. Article 101: Preventive Measures for Market Disruption, Insider Trading, and Fraudulent Practices

Under reasonable suspicion of market disruption, insider trading, or fraudulent practices as outlined in Articles 104, 106, and 107, the CMB may impose preventive measures such as temporary trading bans under Article 101.

Example:On July 7, 2024, the CMB imposed a 6-month trading ban on users identified through reasonable suspicion of market manipulation and fraudulent practices involving social media posts and transactions in listed shares (2024/23 CMB Bulletin).

CONCLUSION

The cryptocurrency technology, which has recently entered our lives and is under legal protection, is not yet fully understood or regulated. This underscores the necessity for users, exchanges, investors, and even individuals making economic comments on social media to exercise extreme caution, given the severe consequences of legal sanctions.

While cryptocurrency and capital market regulations exist in Turkey, they are still in their infancy. Activities previously classified as general fraud under the Turkish Penal Code have now been further refined, adopting norms aligned with global practices.

In summary, both investors and those sharing their financial activities on social media must act prudently. Relying solely on the phrase "This is not financial advice" does not exempt individuals from potential liabilities arising from manipulative or unlawful actions.