The Financial Services Authority (OJK) is considering issuing a regulation on disgorgement funds to protect investors who suffer losses because of criminal acts on the stock exchange.

“The disgorgement fund will only be for investors who suffer losses because of criminal acts, not because of investment failure,” said OJK stock exchange executive head Hoesen in Jakarta on Monday as quoted by kontan.co.id.

He said the funds would be sourced from fines collected from corporations or individuals found to be involved in criminal acts concerning the bourse.

He said a protection scheme for investors had been implemented by the Securities and Exchange Commission (SCE) in the United States. The violations subject to fines include false transactions and insider trading.

Meanwhile, OJK stock exchange supervision deputy Djustini Septiana said the scheme could be adopted in Indonesia, but that it was still in the early stages and needed to be more comprehensively studied before it could be implemented.

“The study will look into whether such disgorgement funds would be managed by a special institution or by the OJK,” she said, adding that the disgorgement fund was different from the Securities Investor Protection Fund (SIPF), which is for investors who lose their funds saved in effect firms or custodian banks.

The SIPF only provides protection for up to Rp 100 million (US$7,082) per investor on the stock exchange or Rp 50 billion per custodian.

Stock exchange investor Irwan Ariston Napitupulu expressed appreciation for the initiative, but added that the protection scheme would be more optimal if the fines against violators were significant enough to ensure the maximal deterrent effect.

He said the fines should not be collected from corporate funds, but from the individual funds of the directors of commissioners who had committed the wrongdoings. (bbn)