Indonesia announced about $117 million in fines tied to manipulative market practices involving three companies, hours after global index provider MSCI Inc. said it was weighing a downgrade of the country’s stock market over investability concerns. The country’s Financial Services Authority said Friday it had found evidence of stock-trading manipulation involving coal miner PT Dian Swastatika Sentosa, including planned and structured trading in its shares through several brokerages. Separate probes also uncovered manipulation in share allocations during the initial public offerings of energy companies PT Barito Renewables Energy and PT Petrindo Jaya Kreasi.
Parties linked to controlling shareholders obscured their identities to secure large allocations, concentrating ownership and limiting the shares available for trading, the regulator said. It announced fines against a mix of underwriters, traders, entities responsible for IPO allocations and ultimate beneficial owners linked to the three companies for violations of capital-market rules. It did not name the sanctioned entities. Fines related to Dian Swastatika, part of tycoon Franky Widjaja’s Sinar Mas Group, totaled 1.5 trillion rupiah ($83.2 million), while those related to Barito Renewables and Petrindo Jaya Kreasi, both affiliated with billionaire Prajogo Pangestu, were 500 billion rupiah and 100 billion rupiah, respectively.
The regulator announced the penalties at a hastily called press conference at the Indonesia Stock Exchange in Jakarta, where officials were joined by lawmakers, the national police chief and executives from sovereign wealth fund Danantara. The FSA said the cases had already been under investigation and weren’t initiated in response to MSCI’s announcement. All three companies were among six removed from the MSCI Indonesia Index in May. The news came hours after MSCI’s warning sent local markets spiraling. The index provider said Indonesia no longer met its criteria for emerging-market status and could face a downgrade to standalone status, risking an ejection from its global indexes and triggering fears of an exodus of foreign capital. The stock market closed down 12%, its biggest one-day drop since 1998.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing