Australia’s
financial watchdog has launched legal proceedings against Macquarie over
allegations it misreported millions of short sales to market operators over a
14-year period, potentially distorting market data used by investors and
regulators.
ASIC Sues Macquarie
Securities for 14-Year Short Sale Reporting Failures
The
Australian Securities and Investments Commission (ASIC) filed suit in the New
South Wales Supreme Court, claiming Macquarie Securities (Australia) Limited
(MSAL) failed to correctly report the volume of at least 73 million short sales
between December 2009 and February 2024, with estimates suggesting the actual
figure could reach up to 1.5 billion transactions.
This marks
ASIC’s fourth regulatory action against Macquarie Group in just over 12 months
and comes amid growing scrutiny of compliance standards across Australia’s
financial sector.
“Accurate
and reliable data underpins the integrity of, and confidence in, Australia’s
financial markets,” ASIC Chairman Joe Longo said in announcing the action.
“Investors expect reliable information to analyze market movements and
inform their investment decisions.”
Systemic Failures
Distorted Market Data
The
regulator alleges the misreporting stemmed from multiple systems-related issues
that remained undetected for more than a decade, affecting data for at least
321 different securities. For each affected security, ASIC claims MSAL inflated
or deflated the published volume of short sales by an average of approximately
12 percent, with some instances exceeding 50 percent.
Short sale
reporting requirements were introduced following the 2008 Global Financial
Crisis to enhance market transparency. The data helps investors, governments
and regulators assess market sentiment and identify potential risks.
“We
allege Macquarie’s failures may have led to the financial services industry
relying on misleading and false information for over 14 years,” Longo
added.
The legal
action also cites MSAL’s failure to correctly report regulatory data for
633,680 orders submitted to market operators between November 2022 and March
2023.
Compliance in Australia’s
$541B Financial Sector
Macquarie
Group, long nicknamed the “Millionaires’ Factory” for its ability to
generate substantial wealth for its executives and shareholders, reported a net
profit of $3.7 billion in its most recent annual report. The firm stated that
it “takes its compliance obligations very seriously and continues to
invest in programs to further improve systems and controls across the
group.”
ASIC is
seeking penalties and an independent review of MSAL’s regulatory reporting
systems, controls and supervisory procedures.
The case
highlights broader concerns about compliance within Australia’s $541 billion
financial sector. Just last week, ASIC imposed additional license conditions on
Macquarie Bank Limited following what it described as more than a decade of
compliance failures.
Other
recent regulatory actions against Macquarie include a record $4.995 million
fine imposed by ASIC’s Markets Disciplinary Panel last September for failing to
prevent suspicious orders in the electricity futures market, and a $10 million
penalty ordered by the Federal Court in April 2024 for inadequate controls over
unauthorized fee transactions.
Australia’s
financial watchdog has launched legal proceedings against Macquarie over
allegations it misreported millions of short sales to market operators over a
14-year period, potentially distorting market data used by investors and
regulators.
ASIC Sues Macquarie
Securities for 14-Year Short Sale Reporting Failures
The
Australian Securities and Investments Commission (ASIC) filed suit in the New
South Wales Supreme Court, claiming Macquarie Securities (Australia) Limited
(MSAL) failed to correctly report the volume of at least 73 million short sales
between December 2009 and February 2024, with estimates suggesting the actual
figure could reach up to 1.5 billion transactions.
This marks
ASIC’s fourth regulatory action against Macquarie Group in just over 12 months
and comes amid growing scrutiny of compliance standards across Australia’s
financial sector.
“Accurate
and reliable data underpins the integrity of, and confidence in, Australia’s
financial markets,” ASIC Chairman Joe Longo said in announcing the action.
“Investors expect reliable information to analyze market movements and
inform their investment decisions.”
Systemic Failures
Distorted Market Data
The
regulator alleges the misreporting stemmed from multiple systems-related issues
that remained undetected for more than a decade, affecting data for at least
321 different securities. For each affected security, ASIC claims MSAL inflated
or deflated the published volume of short sales by an average of approximately
12 percent, with some instances exceeding 50 percent.
Short sale
reporting requirements were introduced following the 2008 Global Financial
Crisis to enhance market transparency. The data helps investors, governments
and regulators assess market sentiment and identify potential risks.
“We
allege Macquarie’s failures may have led to the financial services industry
relying on misleading and false information for over 14 years,” Longo
added.
The legal
action also cites MSAL’s failure to correctly report regulatory data for
633,680 orders submitted to market operators between November 2022 and March
2023.
Compliance in Australia’s
$541B Financial Sector
Macquarie
Group, long nicknamed the “Millionaires’ Factory” for its ability to
generate substantial wealth for its executives and shareholders, reported a net
profit of $3.7 billion in its most recent annual report. The firm stated that
it “takes its compliance obligations very seriously and continues to
invest in programs to further improve systems and controls across the
group.”
ASIC is
seeking penalties and an independent review of MSAL’s regulatory reporting
systems, controls and supervisory procedures.
The case
highlights broader concerns about compliance within Australia’s $541 billion
financial sector. Just last week, ASIC imposed additional license conditions on
Macquarie Bank Limited following what it described as more than a decade of
compliance failures.
Other
recent regulatory actions against Macquarie include a record $4.995 million
fine imposed by ASIC’s Markets Disciplinary Panel last September for failing to
prevent suspicious orders in the electricity futures market, and a $10 million
penalty ordered by the Federal Court in April 2024 for inadequate controls over
unauthorized fee transactions.
This post is originally published on FINANCEMAGNATES.
