Asic sues Macquarie for repeated misconduct
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In proceedings filed in the NSW Supreme Court, ASIC alleges that between 11 December 2009 and 14 February 2024, MSAL failed to correctly report the volume of short sales by at least 73 million. ASIC estimates that this could be between 298 million and 1.5 billion short sales.
ASIC, in its first short sale reporting case, alleges the misleading conduct was due to multiple systems-related issues, many of which remained undetected for over a decade.
Accurate short sale reporting matters. Obligations to report short sales were introduced in 2009, following the Global Financial Crisis. Short sale data is used to inform investors, governments, regulators and financial market participants about market sentiment and potential risks. It also assists in detecting market misconduct and supports market integrity.
ASIC Chair Joe Longo said, '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.
'We allege 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.'
Today's announcement marks the fourth regulatory action ASIC has taken against Macquarie Group in just over 12 months.
'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,' Mr Longo said.
Market Participants must ensure that their systems, controls and governance arrangements are robust and fit for purpose to comply with their regulatory obligations.
In 2020, MSAL undertook a review of its short sale reporting process following weaknesses identified in 2015 and 2019. It is clear this review failed to identify and resolve the issues in these proceedings.
ASIC also alleges MSAL failed to correctly report Regulatory Data for 633,680 orders submitted to the Market Operator between 16 November 2022 and 21 March 2023.
In addition to penalties, ASIC is seeking independent review and assurance of MSAL's regulatory reporting (including short sale reporting) systems, controls and supervisory procedures to ensure compliance with the law.
Background
MSAL is an Australian Financial Services Licensee and a significant market participant of both the ASX and Cboe (formerly Chi-X) markets. It is authorised under its licence to deal in securities on behalf of retail and wholesale clients. MSAL is a subsidiary of Macquarie Group Limited (ASX: MQG), which recorded a net profit of $3,715m in its FY25 annual report.
ASIC alleges that MSAL contravened:
s798H(1) of the Corporations Act 2001 (Corporations Act), by virtue of alleged contraventions of rules 2.1.3 (Supervisory Procedures), 5.5.2 (Organisational and Technical Resources) and 7.4.2 (Regulatory Data) of the ASIC Market Integrity Rules (Securities Markets) 2017
s912A(1)(h) of the Corporations Act: Failure to have adequate risk management systems
s1308(5) of the Corporations Act: Submission of materially false or misleading documents to the market operator, and
s12DF of the ASIC Act 2001: Engaging in conduct liable to mislead the public in relation to financial services.
ASIC alleges that MSAL's misreporting impacted data relating to at least 321 unique securities. ASIC also alleges that for each impacted security, MSAL inflated or deflated the published volume of short sales by an average of approximately 12 per cent, with several instances of misreporting impacting the published short sale volume by 50 per cent or more.
AFS Licensees are required to report certain details about short sales to market operators. Market operators rely on licensees to provide them with accurate short sale information to publish daily aggregated short sale reports to the market, which record the volume of short sales executed per financial product each trading day.
Published short sale reports may be used for various purposes by investors and the financial services industry, including company analysis, informing investment decisions, identifying risks and explaining share price movements. The short sale reports published by ASX and Cboe are accessible through the following links:
ASX Published Short Sale Reports
Cboe Published Short Sale Reports
The short sale reporting requirements were introduced with the objective of enhancing public transparency for short selling activity in Australia. These provisions followed unprecedented volatility in financial markets during the Global Financial Crisis. The duration of MSAL's reporting issues means that it may have failed to comply with these requirements for most if not all of the time that these requirements have been in force.
Further information on short selling, reporting and disclosure obligations can be found in Regulatory Guide 196 Short Selling (RG 196).
Today's announcement follows other actions against Macquarie Group entities:
On 7 May 2025, ASIC imposed additional AFS licence conditions on Macquarie Bank Limited following more than 10 years of compliance failures (25-068MR).
In September 2024, ASIC's Markets Disciplinary Panel (MDP) fined Macquarie Bank Limited a record $4.995 million for failing to prevent suspicious orders being placed on the electricity futures market (24-211MR).
In April 2024, the Federal Court ordered Macquarie Bank Limited to pay a penalty of $10 million for failing to have effective controls to prevent and detect unauthorised fee transactions conducted by third parties, such as financial advisers, on customer cash management accounts using Macquarie's bulk transacting facility (24-080 MR).
In June 2019, ASIC's MDP fined MSAL $300,000 for failing to correctly report Regulatory Data for approximately 42 million orders or trade reports to the relevant market operators (19-125MR).
ASIC's MDP has issued a total of seven infringement notices to Macquarie Group entities for breaches of the Market Integrity Rules, amounting to $6.331 million in fines.
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