JSX suspends four brokerage firms

JAKARTA (JP): The Jakarta Stock Exchange (JSX) suspended four stock broking houses yesterday for failing to deliver Bank Pikko shares to their buyers within nine trading days of the transactions.

The broking houses were PT Finan Corpindo Nusa, PT Artha Gitasejahtera Sekuritas, PT Bumi Artha Securindo and PT Mentari Securindo.

"The four companies failed to deliver Bank Pikko shares to the buyers within nine days after the transactions on April 8," the JSX said.

Finan Corpindo failed to deliver 105,000 Bank Pikko shares, Artha Gitasejahtera 72,500 shares, Bumi Artha 2,500 shares and Mentari 2,500 shares.

On Tuesday the Capital Market Supervisory Agency questioned three JSX directors over trade in Bank Pikko shares on April 8, when the bank's shares soared 207 percent to Rp 4,000 in just four hours before being suspended.

The directors questioned were the JSX's president director, Cyril Nurhadi, the supervision director, Edwin Stambul, and the trading director, Mas Achmad Daniri.

The agency said yesterday it was also investigating more than 100 broking houses which traded Bank Pikko that day.

The agency said such a big increase was unrealistic and probably engineered.

It blamed the rise on inadequate market surveillance by the JSX.

But the head of the agency's transaction and securities bureau, Agus Muhamad, refused to comment yesterday on the questioning of the three broking houses.

"Wait until Friday. We will announce the results of the investigations then," he said.

Many securities analysts saw the trading of Bank Pikko shares on April 8 as market cornering.

Market cornering can happen when one investor has enough shares to enable him manipulate the price.

Analysts said Bank Pikko shares rose astronomically because many investors sold short.

Selling short is when an investor sells a stock he does not own, believing he will be able to buy it back later at a lower price, thus profiting from the difference.

"Many investors lost a lot of money because they had to buy the shares at a very high price," one analyst said.

But Bank Pikko's shares did not tumble as the short sellers expected but kept rising until the stock was suspended. This left many investors licking their wounds.

Bank Pikko was suspended at 2:23 p.m. and relisted on April 10 immediately after the April 9 holiday.

"The trading of Bank Pikko's shares did not breach trading regulations and was in line with capital market mechanisms," said the JSX's president, Cyrill.

Bank Pikko share price fell Rp 425 to Rp 2,325 yesterday. (09)