Macquarie Group Faces Scrutiny Over Compliance Failures

SYDNEY (Reuters) – Australia's Macquarie Group (OTC:MQBKY) displayed a "reckless and poor attitude to compliance" by ignoring warnings related to suspicious futures trades, according to the Australian Securities and Investments Commission (ASIC).

ASIC Chair Joe Longo stated that by enabling about 50 electricity futures trades just seconds before the market closed, Macquarie contributed to market manipulation due to its dominant market position.

Last month, Macquarie, the eighth-largest listed company in the country, was fined A$5 million ($3.31 million) after ASIC's disciplinary panel found it breached market integrity rules by not stopping trades from three clients between January and September 2022. This fine marks the largest ever issued by such a panel.

Despite being warned about the suspicious trades six times by ASIC, Macquarie reportedly did not respond effectively. Longo expressed concerns about how the bank managed the situation, noting, "Those warnings were effectively ignored for too long. There were acknowledgments, but there was no action." He emphasized that Macquarie failed to recognize the significance of its responsibilities in the market.

While Macquarie chose not to comment on the latest allegations, the bank had previously taken full responsibility for its actions and stated it implemented measures to prevent future issues. Longo added that the disciplinary panel discovered that Macquarie staff lacked adequate training to oversee the electricity futures market and that the company did not introduce necessary interim solutions due to resource constraints.

Longo concluded that Macquarie's response to the investigation indicated a serious compliance issue, labeling the incident as “very disappointing.”

($1 = 1.5106 Australian dollars)