Macquarie faces $500m in fines as ASIC alleges short trading reporting flop

The corporate regulator’s latest case against Macquarie could see the bank facing fines up to $500m.

Macquarie CEO Shemara Wikramanayake. Picture: Supplied

Investment giant Macquarie could be on the hook for $500m in fines after the latest broadside from the corporate regulator, who alleges the bank failed to fix its short sale reporting systems despite running three reviews of the platform.

The Australian Securities & Investments Commission alleges that as many as 1.5 billion trades were wrongly characterised in mandatory disclosures.

In court filings lobbed in the NSW Supreme Court on Wednesday, ASIC said the ASX-listed giant delivered more than 14-years of failures to report data and stop “serious neglect of its systems”.

The case comes as the latest regulatory filing against Macquarie, the fourth time ASIC has clashed with the investment giant in 12 months.

Just last week, ASIC hit Macquarie with another court claim, alleging the bank failed to stop misuse of its futures trading platform.

ASIC chair Joe Longo said the regulator’s intervention against Macquarie was “timely given significant recent global market volatility”

“Accurate and reliable data underpins the integrity of, and confidence in, Australia’s financial markets,” he said.

“Investors expect reliable information to analyse market movements and inform their investment decisions.”

Mr Longo warned Macquarie’s failures “may have led to the financial services industry relying on misleading and false information for over 14 years”.

“MSAL’s repeated systemic failure to detect and resolve these issues indicated serious neglect of its systems and disregard for operational controls and technological governance,” he said.

“Our actions reflect the ongoing and deep concerns we have with Macquarie Group and its weak remediation of longstanding issues, which led us to impose additional conditions on Macquarie Bank’s Australian Financial Services licence only last week.”

ASIC chair Joe Longo and commissioner Simone Constant. Picture: Paul Jeffers

The latest case sees ASIC allege Macquarie systematically underreported the size and scope of short trades for years, despite being obliged to properly report the data since 2009, as one of several changes introduced to the financial system in the wake of the Global Financial Crisis.

ASIC alleges Macquarie Securities failures saw the trading arm of the financial giant misreport data across at least 321 listed securities.

This saw Macquarie either inflate or deflate the published volume of short sales across the stocks by an average of 12 per cent.

However, ASIC identified Macquarie wrongly reporting short sale volumes by up to 50 per or more on some occasions.

Financial licensees have been required to report details of short markets to market operators, the ASX and Cboe, on a daily basis.

This data is used by investors and members of the financial sector in a bid to understand market positions against listed companies.

In response to the filing, Macquarie said it would review ASIC’s claims, noting it self-reported the issue to ASIC in late-2022.

“The reporting issues identified in the proceedings have been remediated with additional controls implemented,” a spokeswoman said.

“Macquarie takes its compliance obligations very seriously and continues to invest in programs to further improve systems and controls across the Group.”