Indonesia issues record fines to companies over stock market violations

Jakarta: Indonesia's financial regulator, OJK, has imposed record fines totaling 2.1 trillion rupiah (US$116.67 million) on parties found guilty of violating trading rules involving three listed companies, according to an announcement made late on Wednesday. These fines are the highest ever levied by the regulator, known by its Indonesian abbreviation OJK, according to its chair, Friderica Widyasari Dewi, who addressed reporters on the matter.

The OJK identified the sanctioned parties only by their initials, citing the need for confidentiality. The penalties were part of a broader set of capital market reforms announced by OJK last week, following a warning from MSCI that Indonesia's equities market could be downgraded from emerging to standalone status due to insufficient measures against coordinated trading practices.

A company known as SMT was fined 1.5 trillion rupiah (US$83.33 million) for manipulating shares of Dian Swastatika, causing a significant price surge. Dian Swastatika, a component of the Indonesian conglomerate Sinar Mas Group, operates in the mining and energy sectors. A company named AH Ltd was penalized 500 billion rupiah for withholding information during the initial public offering (IPO) of geothermal company Barito Renewables, while TC Pte Ltd received a 100 billion rupiah fine for a similar breach related to the IPO of energy and mineral firm Petrindo.

The OJK also noted that parties associated with the controlling shareholders of Barito Renewables and Petrindo concealed their connections and received a large share allocation before the IPOs, thereby reducing the number of shares available on the market. Barito Renewables and Petrindo are both controlled by Indonesian tycoon Prajogo Pangestu.

The fines were announced by OJK on Friday, but the regulator has not yet provided further details. Dian Swastatika, Barito Renewables, and Petrindo separately stated in their stock exchange filings on Monday that they acknowledged the OJK's law enforcement measures and would adhere to the rules. Despite being part of MSCI's indices, these three companies were removed from the list earlier this year.

The OJK also imposed fines on several securities companies for stock market violations and temporarily suspended underwriting permits for two individuals.