SINGAPORE – The Indonesian unit of UOB Kay Hian has been fined and suspended from underwriting new listings after regulators discovered due diligence breaches and lapses in its handling of share allocations during an initial public offering (IPO).
PT Kay Hian Sekuritas, previously known as PT UOB Kay Hian Sekuritas, was the underwriter for property developer PT Repower Asia Indonesia, which went public in 2019.
Recent investigations by Indonesia’s financial watchdog OJK found that before trading began, shares reserved for independent investors were allocated to eight individuals, who had earlier declared in their bank account opening documents that they were employees of the issuing company.
OJK also found that their stock purchase was funded by Singapore-based UOB Kay Hian Credit, an affiliate of PT Kay Hian Sekuritas.
A source from OJK called this a “coordinated backdoor financing structure”.
“When an underwriter allows a company’s own staff to buy shares using funds directly loaned by an affiliate of the underwriter, it compromises the integrity of a public offering and creates a false sense of market demand,” the source told The Straits Times on April 10.
“The aim of the underwriters is to create an impression that there is ample organic investor interest when, in reality, the shares were tightly controlled by what is called insider networks,” the source added.
In a statement concerning the case in February, OJK said there are strict rules governing IPO share allocations for insiders to ensure market fairness.
OJK said PT Kay Hian Sekuritas was in a position to identify inconsistencies in the employment information submitted via its affiliate, but failed to do so. Its use of inaccurate information led to breaches of Indonesia’s capital market regulations governing due diligence and share allocation procedures.
The brokerage was fined 250 million rupiah (S$18,500) and its operating licence was suspended for a year.
OJK chief Friderica Widyasari Dewi has pledged to strengthen surveillance and law enforcement, enhance transparency in the stocks beneficiary ownership data, and improve governance across market participants.
Calling the fine imposed on PT Kay Hian Sekuritas “a big amount” during a recent presentation to a small group of foreign journalists in Jakarta, she said: “We want to show everyone that we are very serious about this. We see market manipulation as a very serious issue.”
PT Kay Hian Sekuritas did not reply to ST’s request for comment.
This case came amid a broader effort by Indonesian authorities to tighten oversight of capital markets after a volatile period.
Earlier in 2026, concerns raised by global index provider MSCI about market transparency triggered a sharp sell-off in Indonesian stocks. The authorities have since launched multiple investigations into IPO practices and trading activity.
S&P Global Ratings banking analyst Ivan Tan said Indonesia’s tougher regulatory posture would encourage more stringent compliance standards, which could “bolster both domestic and foreign investor confidence in the country’s capital markets”.
Fitch Ratings director Roy Purnomo said: “The (regulatory) actions, if consistent, should improve transparency regarding share ownership going forward. It should also improve the quality of new IPOs.”