Fed fines Indonesians

Fed fines Indonesians

WASHINGTON (Bloomberg): The U.S. Federal Reserve said on Friday it had fined an Indonesian investor and a Jakarta-based company US$450,000 and ordered them to sell their interest in the parent company of the Bank of San Francisco.

The Fed charged that Putra Masagung and PT Gunung Agung of Jakarta violated the U.S. Bank Holding Company Act as a result of the company's 1997 purchase of the San Francisco Co., parent of the Bank of San Francisco.

On Aug. 7, 1997, the San Francisco Co. said Masagung, who owned 97.8 percent of the company's outstanding Class A common stock, announced that his stake had been acquired by PT Gunung Agung. At the time, neither the Fed nor state regulators had approved of the acquisition by PT Gunung Agung but the investors were discussing the purchase with regulators.

Masagung and the company agreed to the Fed's order without admitting or denying wrongdoing.

The Bank Holding Company Act governs ownership of U.S. banks, and investors must obtain prior clearance from the Fed before taking a significant in a U.S. bank.

The Fed issued a cease and desist order that requires Masagung and PT Gunung Agung to sell their interests in The San Francisco Co. through a voting trust. It orders Masagung to pay a civil penalty of $250,000 and PT Gunung Agung to pay $200,000.

Such a penalty is a significant amount for the Fed to levy in a Bank Holding Company Act violation.