Merrill Lynch allegations proven false

The Capital Market Supervisory Agency (Bapepam) said on Friday that U.S. investment firm Merrill Lynch had been cleared of all insider trading allegations in the sale of shares in state-owned telecommunications firm PT Indosat.

A press release said that Bapepam's decision followed a six- month investigation that involved extensive coordination with the U.S. Securities and Exchange Commission and the Securities and Futures Commission of the UK.

In May, Bapepam launched a probe of the company for alleged involvement in insider trading, an act considered a breach of capital market law.

The allegation erupted when Merrill Lynch was involved in a massive sell-off of Indosat shares, which pushed the shares down by 5 percent. The sell-off took place prior to the government's plan to divest an 11.32 percent stake in Indosat via a private placement.

The divestment program itself was a disappointment as the government could only sell an 8.1 percent stake at a lower-than- expected price of Rp 12,000 per share. -- JP