Indonesia issues record fines to companies over stock market violations

Indonesia's financial regulator, OJK, has imposed record fines totalling 2.1 trillion rupiah (US$116.67 million) on parties found guilty of violating stock market rules in three listed companies. The severe penalties, the highest ever imposed by the regulator, were announced on Wednesday and are part of ongoing capital market reforms.

OJK chair Friderica Widyasari Dewi revealed the fines were imposed on PT Dian Swastatika Sentosa, PT Barito Renewables Energy, and PT Petrindo Jaya Kreasi, with only their initials disclosed to the public. The sanctions were a response to MSCI's warning that it could demote Indonesian equities from emerging to standalone market status due to insufficient efforts to combat coordinated trading practices.

The fines included a 1.5 trillion rupiah (US$83.33 million) penalty on company SMT for market manipulation of Dian Swastatika's shares, leading to a significant price surge. An additional 500 billion rupiah (US$28 million) fine was imposed on a party identified as AH Ltd for misleading information during Barito Renewables' initial public offering, and a 100 billion rupiah (US$5.83 million) fine was handed to TC Pte Ltd for a similar offense related to Petrindo's IPO.

Both Barito Renewables and Petrindo are controlled by Indonesian tycoon Prajogo Pangestu, and their affiliated parties were found to have manipulated share allocations ahead of the IPOs, reducing market liquidity. The regulator's announcement came after MSCI removed the three companies from their indices earlier this year. Companies and controlling shareholders, including Sinar Mas Group and Prajogo Pangestu, declined to comment on the record fines.