Bapepam revokes security firms' permits

Novia D. Rulistia, The Jakarta Post, Jakarta | Tue, 04/22/2008 1:08 AM | Business

The country's equity market watchdog revoked the license of two securities firms for violating market regulations, following cancellation of the initial public offering (IPO) of one of Honda's main motorcycle dealers, PT Wahanaartha Harsaka.

"The IPO underwriters, PT BNI Securities and PT Investindo Nusantara Sekuritas, are banned from underwriting for three months and six months, respectively," said Fuad Rahmany, head of the Capital Market, Financial Market and Financial Institutions Supervisory Agency (Bapepam-LK), on Monday.

License revocation was applied also individually to underwriters representatives Jimmy from BNI and Alverno Julyardono from Investindo concurrently with their respective companies.

Market regulator Fuad said the agreed prospectus was violated because cancellation could only be carried out during the offering period April 2-4 and prior to the closing date.

Wahanaartha decided to cancel the listing on April 7. It was slated to list its name at the Stock Exchange on April 11.

The company and the two underwriters said they did not intend to cancel the listing, but only to postpone it.

According to Bapepam, BNI received a shorter penalty period because unlike Investindo, it completed its commitment to buy the remaining unsold shares offered to the public.

Wahanaartha had planned to raise Rp 140 billion (about US$14.8 million) in proceeds from the sales of 590 million shares, equal to about 29.5 percent of its total shares.

The proceeds would have been used to support working capital and expansion of subsidiaries, including the opening of 70 new outlets between 2008 and 2012.

However as of April 4, it only managed to sell 10 percent of the total offered shares.

All the proceeds were later returned to the investors following the cancellation announcement.

In order to avoid the recurrence of such a violation, Bapepam is now reviewing the regulation on the cancellation of IPOs.

"This is the first such case in the history of the capital market. We're now reviewing the regulation and making it more detailed. I hope (the adapted regulation) will be ready soon," Fuad said.

He said the measure was needed to maintain stability and discipline in the capital market whilst protecting investors.

"Market integrity is important, therefore we hope all stakeholders will abide by the agreements they have made."

Indonesia has seen the fastest stock market growth in Asia over the past five years, both in terms of capitalization and investors.

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