ASIC sues Macquarie Securities over 'misleading conduct'
Macquarie Securities, the broking arm of Macquarie Group, has been sued by ASIC for allegedly engaging in repeated and systemic misleading conduct in its short sale reporting to the market operator, supposedly misreporting millions of trades over 14 years.
ASIC lodged proceedings against Macquarie Securities in the NSW Supreme Court, claiming that, between December 2009 and February 2024, it failed to correctly report at least 73 million short sales.
The regulator, however, believes the scale of total misreporting could be between 298 million and 1.5 billion short sales.
ASIC also contends that Macquarie incorrectly reported regulatory data for 633,680 orders submitted to the market operator between November 2022 and March 2023.
ASIC chair Joe Longo claimed that Macquarie's alleged blunders possibly led to the financial services industry "relying on misleading and false information" for over a decade.
Macquarie stands accused by ASIC of misreporting data on at least 321 unique securities.
It further alleged that for each impacted security, Macquarie inflated or deflated published short sale volumes by an average of 12%, and in some cases, distorted figures by over 50%.
ASIC says short sale reporting matters, as the data is used to inform investors, governments, regulators, and financial market participants about market sentiment and potential risks.
It also helps detect market misconduct and supports market integrity.
Longo says that accurate and reliable data underpins the integrity and confidence in Australia's financial markets.
He also says that "investors expect reliable information" to analyse market movements and make informed investment decisions.
"This action is timely given significant recent global market volatility.
Macquarie Securities repeated systemic failure to detect and resolve these issues indicated serious neglect of its systems and disregard for operational controls and technological governance," he says.
ASIC noted that Macquarie Securities reviewed its short sale reporting process in 2020 after weaknesses were identified in 2015 and 2019.
However, clearly this review, it says, "failed to identify and resolve the issues in these proceedings".
ASIC is seeking penalties as well as an independent review of Macquarie Securities regulatory reporting systems, controls, and supervisory procedures to ensure compliance with the law.
This marks ASIC's first enforcement action over short sale reporting since regulations were introduced in 2009 following the Global Financial Crisis.
Macquarie, however, is no stranger to an ASIC crackdown - this latest action is its fourth regulatory hit in little over a year.
"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," Longo says.
This article first appeared on Financial Standard
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