Jakarta. The Indonesian Police said on Tuesday they have frozen bank and securities accounts belonging to several stock brokerage firms worth a combined Rp 674 billion, approximately $40 million, as part of an investigation into alleged insider trading and market manipulation.

The probe follows a turbulent week for Indonesia’s capital market after a report by MSCI Inc flagged transparency issues and alleged coordinated transactions on the local exchange. The report triggered a sharp sell-off that sent the benchmark index down nearly 7% and wiped about $74 billion off the market capitalization of the Indonesia Stock Exchange (IDX).

The turmoil led to the resignation of IDX chief executive Iman Rachman, followed by the departure of top officials at the Financial Services Authority (OJK).

“The Criminal Investigation Agency is currently conducting a formal investigation into insider trading and fictitious trading practices in the capital market,” said Brig. Gen. Ade Safri Simanjuntak, director of special economic crimes at police headquarters.

Narada Asset Management
One case centers on brokerage firm Narada Asset Management, where investigators found indications that the underlying assets of certain mutual fund products consisted of project-related shares controlled by insiders through affiliated networks.

Police suspect the transactions were deliberately structured to create a false impression of stock prices, causing market prices to diverge from companies’ underlying fundamentals.

According to Ade Safri, capital market experts consulted by investigators said transactions conducted among affiliated parties can influence share prices and mislead investors, pointing to potential market manipulation and the creation of artificial demand.

In the Narada case, police have questioned 70 witnesses and sought expert opinions from capital market specialists. Two suspects have been identified by initials MAW, the firm’s president commissioner, and DV, president director of affiliated company Narada Adikara Indonesia. Authorities also froze accounts worth about Rp 207 billion.

Minna Padi Asset Management
Investigators are also probing Minna Padi Asset Management (MPAM), where they found suspected coordinated transactions involving shares used as underlying assets for mutual fund products.

The transactions allegedly involved MPAM’s mutual fund accounts and a shareholder identified as ESO, who also holds stakes in affiliated companies Minna Padi Investama and Sanurhasta Mitra, Ade Safri said. The scheme allegedly involved buying affiliated shares at low prices and reselling them to other mutual funds at significantly higher prices to generate profits.

In the MPAM case, investigators have examined 44 witnesses and consulted both criminal law and capital market experts. Three suspects have been named: MPAM president director DJ, ESO, and ESO’s wife.

Police have also frozen 14 securities sub-accounts linked to MPAM and its affiliates, including six mutual fund sub-accounts with a combined value of Rp 467 billion.