Indonesia Fines Stock Manipulators as Market Crashes 12 Percent
Indonesia's Financial Services Authority imposed $117 million in fines for stock manipulation as a potential MSCI downgrade triggered the market's steepest crash since 1998.
The Financial Services Authority of Indonesia imposed fines totaling 2.1 trillion rupiah, approximately $117 million, on entities linked to three companies for stock manipulation and misleading IPO allocations. The largest penalty of $83.2 million targeted coal miner Dian Swastatika Sentosa for coordinated trading to inflate stock prices. Additional fines were levied against Barito Renewables Energy and Petrindo Jaya Kreasi for using masked identities to reserve IPO shares for affiliated groups.
Reports on the targets of these penalties differed, with the Jakarta Globe describing them as administrative fines on the companies, while Bloomberg reported they targeted underwriters, traders, and beneficial owners. The announcement occurred as MSCI Inc. warned that Indonesia could be downgraded from emerging-market status, contributing to a 12 percent drop in the Indonesian stock market. This represents the steepest single-day decline since 1998.
Regulators stated the penalties were the result of prior investigations and were not a response to the MSCI warning. Hasan Fawzi, an executive at the authority, noted that 31 of 61 stocks on the High Shareholding Concentration list show indications of potential criminal violations.
