As if avoiding an obligation clearly mandated to it, the Capital Market and Financial Institutions Supervisory Agency (Bapepam-LK) sent a chilling message to stock market investors; do not count on Bapepam to protect your money.

Investors should not fully trust their brokers and should have full control of the use of their funds to avoid misuse, as Bapepam is virtually helpless and unable to strictly monitor many thousands of transactions and accounts belonging to securities firms, Bapepam head Fuad Rachmany said on Friday.

"Do not count entirely on Bapepam. It's impossible for Bapepam to watch over such things. Our job does not deal with monitoring customer accounts. We are regulators, we are not security guards," Fuad said.

These remarks were Fuad's response to criticism over Bapepam's failure to detect much earlier an alleged fraud involving one of the nation's biggest local securities firms, PT Sarijaya Permana Sekuritas, whose owner Herman Ramli has been put in detention for misusing Rp 245 billion (US$22.5 million) of investors money.

Herman is the younger brother of Rudy Ramli, the founder of the now-defunct Bank Bali.

Bapepam's failure puts the credibility of the stock market watchdog under the microscope once again, as the case surfaced after revelations concerning a similar scam already involving PT Antaboga Delta Sekuritas, whose owners are being charged for allegedly misusing Rp 1.4 trillion of investor funds.

Critics say Bapepam clearly has not learned the lessons from Antaboga, by allowing a similar case to emerge.

However, Fuad's statement puts the blame for the occurrence of such frauds squarely on investors and on the management of securities companies.

Fuad called on investors to stop being so naive in investing their money without due care, whilst giving such full trust to brokers.

"Investors must not give their full trust to their brokers. They still have to control (their funds) .. they must always monitor the balance sheets and the value of their assets."

An expert on stock market law Indra Savitri told The Jakarta Post that Fuad's remarks were inappropriate as the 1995 Stock Law clearly states that Bapepam has the obligation to give protection to investors from fraudulent practices.

"This (protection) will be carried out, by monitoring the market continually," he said, adding that the recent cases showed that the Bapepam monitoring system was weak.

Following the emergence of the Sarijaya case, Bapepam together with the Indonesia Stock Exchange (IDX) authority has been working on a new system that will allow every investor to check their accounts and assets recorded by the Indonesia Central Securities Depository (KSEI).

At present, securities houses are not giving out account reports to clients and regulators at the same time, a delay that may provide leeway for fraud.

Meanwhile, after the latest development in the Sarijaya case, Bapepam's head of division for securities transactions Nurhaida said Friday customers of Sarijaya would be given time until Jan. 16 to submit claims to recoup their losses.

"They can send it (the claim) by mail or they can come to Sarijaya branches," she said.

The claims will be used in the asset verification process, which is currently being carried out by IDX and Bapepam in relation to the Sarijaya case.

The fraud identified is alleged to have involved 8,700 accounts of Sarijaya customers, of which 6,500 belonged to retail investors.

Popular

Essay competition: ‘Rethinking work: Driving sustainable growth in the digital age’

Indonesia seizes ship carrying narcotics worth $426 million

JIHS Hackathon 2025 concludes with breakthrough innovations in Jakarta’s SCBD