Bapepam urged to step up probe on trading scams
JAKARTA (JP): Analysts have called on the capital market watchdog and stock exchange operators to step up efforts to investigate alleged insider trading practices in the local stock market.
Senior economist Sjahrir said the capital market regulator's reluctance to take serious action over reported stock trading scams would further weaken the image of the country's flagging capital market.
"The capital market regulator's failure to improve transparency and fully investigate any capital market scandal is one of the dominant factors behind the continued decline of our bourse," Sjahrir of the Institute for Economic and Financial Research (ECFIN) said on the sidelines of a seminar on insider trading practices on Thursday.
The bad image of the local market coupled with the worsening of the country's economic fundamentals resulting from the rupiah's collapse against the U.S. dollar have contributed to the continued fall in share prices.
The Jakarta Stock Exchange (JSX) Composite Price Index has lost more than 60 percent of its value since the crisis began in July 1997 to fall to below 300 points from nearly 750.
The average daily transaction value has also plunged to about Rp 125 billion (US$11.11 million) compared to the pre-crisis level of around Rp 500 billion (then $205 million).
Sjahrir said the bearish market conditions should not be taken as an excuse to strengthen law enforcement.
"It seems to me that Bapepam (the Capital Market Supervisory Agency) does not have any political will to probe the stock market scandals taking place in the market," he said.
Gresik scandal
Sigma research Institute director Jasso Winarto shared Sjahrir's view. He said that the unwillingness of the stock exchange operators and Bapepam to investigate trading scams was reflected by their slow action on alleged insider trading on Semen Gresik shares recently
"Bapepam should come in with strong action and impose penalties on any parties involved in insider trading," he said.
In June the then Bapepam chairman I Putu Gede Ary Suta hit the headlines after he unveiled a possible massive trading scam involving Semen Gresik shares.
The price of Semen Gresik shares rose by more than 50 percent in less than a week in June following unconfirmed reports that Mexican cement producer Cemex had received the green light from the government to take over a majority stake in the company.
Putu said he believed large transactions on Semen Gresik shares taking place before Cemex's deal was made known to the public were based on an insider information.
Putu made his statement only a few days before he was replaced by current chairman Jusuf Anwar, who later promised to probe the alleged insider trading practice. But no results of the investigation have so far been announced to the public.
The head of Bapepam's legal bureau, I Nyoman Tjager, said Thursday, however, that the team was still working on the case as it had to summon more parties which were allegedly involved in the stock scam.
"The team is still working on the case and it has not delivered any results,' he said.
He declined to mention when the investigation would be completed, arguing that Bapepam did not have any deadline to investigate the case.
"You know... it is not like reporters who have deadlines in their job, we do not have a deadline to investigate the case,' he said.
Former JSX president Hasan Zein Mahmud, however, contended that Bapepam should immediately wrap up the Semen Gresik scam probe to avoid any speculation that the capital market regulator was apathetic to the issue.
According to the Capital Market Law, people convicted of insider trading or buying or selling shares based on insider information, could be sentenced to a maximum of 10 years in jail and be liable to pay a fine of up to Rp 15 billion (US$1.38 million). (aly)