Bapepam focuses BCA inquiry on 14 investors, 15 brokerages

JAKARTA (JP): The Capital Market Supervisory Agency (Bapepam) has narrowed its investigation down to 14 stock investors and 15 securities firms, from a total of 172 securities firms examined, in relation to the suspected manipulation of PT Bank Central Asia (BCA) share prices.

Bapepam chairman Herwidayatmo said on Friday that his office and a team from the Jakarta Stock Exchange (JSX) had concluded the first stage of the investigation regarding the alleged manipulation of BCA share prices.

During the first stage, he said, Bapepam had investigated 20 securities firms and collected trading data from another 152.

"We believe the share price manipulation was conducted by 14 investors and 15 securities firms," he said during a media conference.

He said the 14 investors included local, foreign, retail and institutional investors.

Herwidayatmo declined to reveal the investors' identities or the names of the 15 securities firms.

"As yet we can't tell whether investors and securities firms collaborated, or whether the latter had simply been a tool for the investors," he later told The Jakarta Post.

Last month, the agency indicated that the price of BCA shares had been manipulated to a certain price level.

The findings were based on analysis of BCA share-trading patterns conducted by 172 securities firms during the trading period from May to mid-July.

Between May 15 and June 12, several securities companies had dominated the purchase of BCA shares, causing its price to surge.

But from June 13 until June 29, the same securities companies dominated the selling of BCA shares, leading the market into panic-selling that drove down the price of the shares.

Investors manipulating BCA share prices would benefit from the capital gain achieved from buying cheap and selling high.

Those guilty of manipulating share prices in the stock market face penalties of up to Rp 15 billion (about US$1.57 million) and jail terms of up to 10 years under Article 91 of Law No 8/1995 on the capital market.

BCA stock trading has been shrouded in controversy since the bank concluded its secondary public offering last month.

As part of a deal with the International Monetary Fund (IMF), the government must divest a 40 percent stake in the nationalized BCA.

The first 10 percent of that divestment plan, which followed an initial public offering last year, was sold through the secondary public offering that ran from July 4 to July 6, 2001.

Another 30 percent is to be offered through private placement to local or foreign strategic partners.

Next to fabricating capital gains, market manipulation of BCA shares is also believed to have advantaged bidders of the 30 percent stake.

The Indonesian Bank Restructuring Agency (IBRA), which is in charge of the sale, has said it wanted bidders to submit offers at the premium level of BCA's share price on the stock market.

Trading data shows that the suspected securities firms started to sell BCA shares at the same time IBRA was scheduled to announce final bidders for the 30 percent stake.

IBRA should have made the announcement on June 29 at the latest, the same date that the panic-selling, driving BCA share prices down, ended.

Instead, the agency said it needed more time to negotiate a better deal with the bidders.

Analysts suspected that the postponement was due to the drop in BCA's share price. So far, IBRA has yet to announce the bidders.

IBRA chairman I Putu Ary Suta said he was awaiting appointment of the new finance minister before making any announcement.

"I will report to the new finance minister one or two days after his appointment," he said.

Bapepam also investigated charges of insider trading in BCA shares prior to the bank's secondary public offering.

Investors who knew of the Rp 900 share price for the secondary offering well in advance could again formulate a capital gain.

Bapepam, however, dismissed the suspicion of insider trading.

It said that BCA's prospectus had ensured that every investor traded on equal information.

When asked whether the price of BCA's shares was included in the prospectus, however, Herwidayatmo said that it was not.

"IBRA announced the price of BCA shares being offered, just a few days before the secondary offering," he said. (bkm)