Macquarie shares fall as ASIC flags legal action
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More news: Macquarie Group shares fell at market open after the corporate watchdog announced it was suing subsidiary Macquarie Securities (MSAL) for misreporting millions of short sales over 14 years.
Its shares were down 1.2% to $212.75 after the first half-hour of trade but are still up 12.82% over the past 12 months.
In a statement, Macquarie said MSAL had first identified daily reporting issues and self-reported to ASIC in late 2022. It subsequently found a number of related issues and also self-reported those to ASIC.
What they said: “The reporting issues identified in the proceedings have been remediated with additional controls implemented,” Macquarie said.
“MSAL is now reviewing ASIC's claim. As the matter is before the court, it would be inappropriate for Macquarie to make further comment.
“Macquarie takes its compliance obligations very seriously and continues to invest in programs to further improve systems and controls across the Group.”
ASIC sues Macquarie Securities over alleged misleading conduct
The news: ASIC is suing Macquarie Securities, accusing Macquarie Group's cash brokering arm of engaging in misleading conduct by misreporting millions of short sales for over 14 years.
The numbers: The corporate watchdog alleges that Macquarie Securities failed to correctly report its volume of short sales by at least 73 million between December 2009 and February 2024.
ASIC said it estimates the figure could be between 298 million and 1.5 billion short sales.
The watchdog also alleges the Macquarie Group subsidiary failed to correctly report regulatory data for 633,680 orders submitted to the market operator between November 2022 and March 2023.
This is the fourth regulatory action ASIC has taken against Macquarie Group in just over 12 months.
The context: ASIC said Macquarie Securities failure was due to "multiple systems-related issues, many of which remained undetected for over a decade”.
The regulator is seeking penalties along with an independent review and assurance of its regulatory reporting (including short sale reporting) systems, controls and supervisory procedures to ensure compliance.
Short sale data is used to give a picture on market sentiment, potential risks and helps to detect market misconduct.
What they said: ASIC chair Joe Longo said: “Our actions reflect the ongoing and deep concerns we have with Macquarie Group and its weak remediation of long-standing issues, which led us to impose additional conditions on Macquarie Bank’s Australian Financial Services licence only last week”.
“This action is timely given significant recent global market volatility. Accurate and reliable data underpins the integrity of, and confidence in, Australia’s financial markets. Investors expect reliable information to analyse market movements and inform their investment decisions.
“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.”
The source: ASIC
