Macquarie Bank sued by ASIC

Australia Broadcast Center

14-05-2025

Samantha Donovan: Hello, welcome to PM. I'm Samantha Donovan coming to you from the lands of the Wurundjeri people of the Kulin Nation in Melbourne. Tonight, the corporate watchdog takes Australia's biggest investment bank to court. Also, anti-abortion activists in New South Wales accused of bullying as the issue is debated in state parliament. And politicians across the country under pressure as voter anger about crime grows.
Paul Williams: There's no doubt that no matter where you live in Australia, youth crime is an issue. And I think that it's something that, you know, any state or territory government that doesn't address it is bound to be punished by the electorate.
Samantha Donovan: First this evening, Australia's largest investment bank, Macquarie Group, has again found itself in hot water with the corporate regulator. The Australian Securities and Investments Commission, or ASIC, is taking Macquarie Securities to court for allegedly engaging in misleading conduct by misreporting millions of short sales to the market between 2009 and 2024. A short sale involves an investor borrowing shares at a high price, selling them and then buying them back, hopefully at a lower price, to make a profit. This latest intervention comes less than a week since ASIC found significant supervision and compliance failures in a separate Macquarie Bank division. Our business correspondent, David Taylor, spoke with the ASIC chair, Joe Longo.
David Taylor: What is ASIC alleging that Macquarie Securities has done?
Joe Longo: Well, Macquarie is under an obligation to report short sales. And so the allegation in this case is that over many years, since 2009, Macquarie have not been accurately reporting their short sales and related regulatory data.
David Taylor: OK, so if I get the picture straight, we're looking at, geographically, Sydney, Macquarie Bank's headquarters, the dealing room. And you've got traders since the global financial crisis engaging in this short selling activity, trying to make a profit. And the transaction data that resulted from those trades wasn't accurate when it landed on your desk.
Joe Longo: Yeah, that's correct. The number of trades and the number of reports that were inaccurate will be subject to the court case, but it's in the millions. And so Macquarie have been unable to tell us exactly how many trades they failed to report or inaccurately report. But we've been able to find evidence of many millions of trades that were not reported.
David Taylor: There's one thing to have erroneous compliance measures. It's another thing that Macquarie was giving you the wrong figures on purpose to achieve some kind of end for Macquarie. Is that also a possibility?
Joe Longo: Now, let me be very clear. There's no suggestion in this case that this was deliberate, that this was a consistent failure over many years of Macquarie's systems. Over the years, we were we got reassurances that their issues with their reporting were being fixed or had been fixed when in fact they hadn't been. But we're not alleging in this case that the conduct was deliberate. That this really represents an underinvestment in the systems and processes, a hubris, an arrogance that they thought they'd fixed the problem when in fact they hadn't. And so this case is really saying we're taking you to court because we've had enough. We've given us all these reassurances over the years and you haven't improved.
David Taylor: Just on that, Joe Longo, though, you pulled Macquarie Bank up last week for misreporting its trading activities on its derivatives desk. So does Australia's biggest investment bank have a systemic compliance problem because that's significant?
Joe Longo: Well, we do have very fundamental concerns about the risk management processes and systems and their risk management culture. And we have our trust and confidence in compliance in Macquarie's compliance culture and risk management has been significantly undermined over the last period of time. And that's why you're saying all of these matters being brought by ASIC and indeed also been instances by regulators in the US and the UK as well. So, yes, we are very concerned about the compliance culture at Macquarie and we've enhanced our supervision and monitoring of what's going on over the last 12 months in particular.
David Taylor: Joe Longo, ASIC says that the bank's, quote, repeated systemic failure to detect and resolve these issues indicated serious neglect of its systems and disregard for operational controls and technological governance. End quote. Now, you've tried on multiple occasions to pull Macquarie Bank into line. How long before ASIC actually takes Macquarie's financial services license away from it?
Joe Longo: We're some way from that. Macquarie is a major institution of the Australian economy. They're a very successful institution. Our expectation is that they should be able to deal with these issues and they've simply not done so. So our job is to hold them to account for that. And in the coming year or two, you can expect us to continue to intensify our supervision of Macquarie. But there's no suggestion at this point that their license is at risk.
David Taylor: But you wouldn't rule it out, though, because there's there's only so much that you can warn them about.
Joe Longo: Well, every institution that's a holder of a license needs to be careful they hang on to it.
Samantha Donovan: The chair of ASIC, Joe Longo, is speaking with our business correspondent, David Taylor, and Macquarie Group has told the ABC it's now reviewing ASIC's claim. But it says the reporting issues identified in the proceedings have been remediated, and it added that as the matter is now before the court, it isn't appropriate for the bank to make any further comment. The U.S. President Donald Trump has met with Syria's interim president, Ahmad al-Sharaa, in Saudi Arabia. It's the first time leaders of the two nations have met in 25 years. It came not long after Mr. Trump announced the U.S. will lift sanctions on Syria. Those sanctions were imposed during the dictatorship of Bashar al-Assad, which was overthrown last December. Professor Bob Bowker is with the Australian National University's Centre for Arab and Islamic Studies. He's also a former Australian ambassador to Syria. He told me the American decision to lift sanctions on that country is a positive move.
Bob Bowker: The Syrian leadership is only barely in control of the various militias that brought it to power, indeed to exercise discipline among their own ranks. They really have to show that they are performing on the economic front much more strongly than they are at the moment. And Trump's message, and it's clearly been well received on the streets in Syria, is that the United States is not going to get in the way of that. I think that that's very good news for Syria and it's good news for the region.
Samantha Donovan: How will it actually help the Syrian people?
Bob Bowker: Well, the first thing is likely to be American investment in oil, because that is a resource that has been badly run down over the period of the civil war. The other area, of course, is hotel construction, tourism and the like, because those are jobs that will immediately provide a predictable prospect of a return to normality for many middle class Syrians.
Samantha Donovan: Donald Trump said he made the decision to lift the sanctions after speaking to Turkey's President Erdogan and Saudi Arabia's Crown Prince Mohammed bin Salman. What would their case to the American president have been?
Bob Bowker: I expect that they made the argument that the future of the region lies in commerce, not in chaos. And that is something which bin Salman has been consistently arguing now. That it is up to the region to shape its own future. Now, for Trump, who is essentially a nationalist and doesn't really look positively at external interventions of any sort, the notion that the region will find its own feet appeals enormously to him. So at a personal level, it's going to mean a lot to Trump to have people telling him that it's been a job well done. The people who will not be saying that to him, of course, will be the Israelis.
Samantha Donovan: Tell us a little bit more about why Israel won't be happy with this decision.
Bob Bowker: As far as Syria is concerned, the the Israelis have clearly decided that it is unlikely that a government that is stable in Damascus will be to their strategic advantage. And indeed, there is concern in Israel that Turkey may wind up providing a degree of strategic depth to a new government in Damascus that will be ideologically very unsympathetic toward Israel. But on the other hand, I think the reality is that Trump has identified what needs to be done in Syria, which is setting aside for a while at least our concerns about its potential to move in directions that are antagonistic toward our notions of how a society should operate. I mean, an Islamist dominated government in Damascus will be bad news for women, will pose very great questions about the futures of minority groups, including Christians and Yazidis and others. But those issues need to be dealt with down the track. What we are facing in the immediate term is a need to get a government in place that is able to make effective decisions and deliver on those decisions.
Samantha Donovan: I know you listened to President Trump's speech in the Saudi capital, Riyadh. What did you make of it?
Bob Bowker: I think the United States has recognised, and this is really what came through in the speech, it's recognised that the Gulf has more to offer the United States than has Israel. I'm not saying that Israel is a liability, but it is certainly no longer able to sell itself as a strategic asset to Trump in the way that was possible with previous US presidents and politically the force to be reckoned with, if you are an aspiring Republican politician, it is no longer AIPAC and the pro-Israel lobby. It is Trump and the Trump machinery. And that is a message I think that we'll be getting across the American political system.
Samantha Donovan: President Trump's visit to the Middle East isn't over yet. What else are you watching out for?
Bob Bowker: The next phase of this visit will be in Doha, where Trump is expected to make a statement on the future of the conflict in Gaza. And there is widespread expectation that Trump will insist that the conflict be ended immediately and that the entirety of the hostages held by Hamas be released. But the key to watch, I believe, in Doha tomorrow and the next few days is whether Trump is prepared to insist that aid flow immediately into Gaza from Egypt under the supervision and using the resources of the United Nations and the World Food Program. It is, I think, absolutely unacceptable to agree to what the Israelis are proposing, which is to control access to that food aid and deliver it through private military companies without a regard for the principles under which the United Nations has long operated its humanitarian relief. There's overwhelming evidence of starvation and the immediate need to release the aid that is currently waiting on the border with Egypt to reach starving people.
Samantha Donovan: Professor Bob Bowker from the Australian National University's Centre for Arab and Islamic Studies. He's also a former Australian ambassador to Syria. To the trial in regional Victoria of accused triple murderer Erin Patterson now where mushroom experts have been giving evidence. Ms Patterson's mother and father-in-law and her husband's aunt died after eating a Beef Wellington lunch. She served them in 2023. Prosecutors allege it contained poisonous death cat mushrooms. Ms Patterson has pleaded not guilty to three counts of murder and to another charge of attempted murder. For the latest, I spoke a little earlier to ABC reporter Sacha Payne, who's in Morwell for the trial. Sacha , the trial has been hearing evidence from mycologists, which I understand are mushroom experts. One has been from the Royal Botanic Gardens in Melbourne. What has he told the court?
Sacha Payne: Yes, well, we've heard a lot of detail in the last couple of days about mushrooms in particular. There's been a lot of discussion and questions in the trial till now about the health status of Erin Patterson, the relationship she's had with her family and her ex-husband, and also, of course, the health status of the guests at the lunch. But in the last couple of days, we've really drilled down into death cat mushrooms, identifying mushrooms and how difficult it is to actually identify mushrooms just from a photo. Now, yesterday we heard from a globally recognised mushroom expert, Dr Tom May. He told us yesterday that he had seen death cat mushrooms growing when he went on a walk in Outrim, which is in South Gippsland, not far from where Ms Patterson lives. He says that he took photos and he uploaded those photos to a website which is called the iNaturalist website. He was questioned again today in detail about mushrooms on that website. The court was shown dozens of different mushrooms. Some were death cats, some were not. And Dr May was asked about the difficulty in identifying a death cat mushroom just from a photo. And he says he admitted that there is a range of edible mushrooms that share physical similarities like colour with death cat mushrooms. And that there are many native species of mushrooms, including amanita, of which the death cap is one species of amanita.
Samantha Donovan: And there was another mushroom expert giving evidence today. And I understand she talked about the actual Beef Wellington meal that Erin Patterson served to her guests. What was her evidence to the court?
Sacha Payne: Well, yes, Dr Camille Truong, who also works at the Royal Botanic Gardens with Dr May. So she's another mycologist, a mushroom researcher who specialises very specifically in mushrooms. She said she received a call that a package had been dropped off for her at the Royal Botanic Gardens several days after the lunch. And when the guests were in hospital showing signs of mushroom poisoning and when Ms Patterson was also in hospital, she says that she examined the leftovers. The package was sent to her at her home. She says it contained large resealable bags with food inside. And that when she looked at them under a microscope, she looked for what kind of mushrooms were in there. She was asked by the prosecution, did you find any death cat mushroom pieces? And she said, no, she didn't. She says she then took the sample to the Royal Botanic Gardens the next day and again looked at it under a microscope and again was asked, did you find any signs of death cat mushrooms? And she says, no, she didn't. But all she found in the sample that she looked at were field mushrooms that are commonly found at supermarkets.
Samantha Donovan: The ABC's Sacha Payne reporting from Morwell in Gippsland. This is PM. I'm Samantha Donovan. You can hear all our programs live or later on the ABC Listen app.
Samantha Donovan: Proposed laws that would allow experienced nurses and midwives to prescribe abortion medication to terminate early stage pregnancies have passed the New South Wales lower house. The bill has prompted significant protests outside Parliament and politicians, the nurses union and academics are accusing those protesters of spreading misinformation. Myles Houlbrook-Walk reports.
Tony Abbott: And by God bless our society from this shameful act of decline.
Myles Houlbrook-Walk: Outside the New South Wales Parliament last week in Sydney, protesters gathered, among them Tony Abbott, some faith leaders and other activists voicing their concern about a bill that would allow experienced nurses and midwives to prescribe abortion medication. It's something that already happens in Queensland, Victoria, Western Australia, South Australia and the ACT. Another high profile critic of the bill is Joanna Howe, a legal professor from the University of South Australia who's campaigned across the country to reduce access to abortion.
Joanna Howe: On the one hand, I'm incredibly proud that we've been able to gut this bill of three out of four of its elements. But on the other hand, I am devastated that it is a bill that now will lead to a new class of health practitioner being involved in abortion.
Myles Houlbrook-Walk: In its original form, the bill required medical professionals who object to providing abortion to refer the patient to another medical professional. Amendments have now removed that requirement. Dr. Howe has been accused of bullying by the New South Wales Premier and the opposition leader, a claim she rejects. She's also been criticised by Greens member of the Upper House, Dr. Amanda Cohn, a GP turned politician who introduced the original version of this bill.
Amanda Cohn: A number of MPs in the debate called out the bullying and intimidating tactics that we've seen from some of the opponent to the bill. And that was really heartening and really unifying for people in the parliament.
Myles Houlbrook-Walk: Dr. Anna Noonan is a research fellow at the University of Sydney School of Rural Health. She says the changes in this bill would improve access to safe abortion, especially for those living further from large cities.
Anna Noonan: For people living outside metropolitan centres in New South Wales, options for abortion care locally are really scarce. The nursing workforce really do provide that frontline care to rural and remote communities. These are highly skilled and qualified people who are well positioned and well trained to provide medication abortion.
Myles Houlbrook-Walk: Dr Prudence Flowers from Flinders University researches the social issues and history around abortion and family planning. She says across the country, there's a growing political movement seeking to reduce access to abortions.
Anna Noonan: In South Australia, the bill that was introduced was attempting to restrict access to abortion after a certain point. And so it was a modification of the decriminalisation bill. In Queensland, there wasn't really actual legislation. It was this kind of debate. But so both of those were more explicitly attempts to change the law or erode the law.
Myles Houlbrook-Walk: Dr Flowers has also studied closely the history of abortion rights in the US and says much of the opposition in Australia has been emboldened by a decision to overturn Roe v. Wade in 2022 by the American Supreme Court, which significantly reduced access to abortion.
Prudence Flowers: I think the reason there's this huge upsurge, so both there's the the example of the US has emboldened a lot of opponents of abortion. And they can see that it is possible to reverse legalised abortion. But you can also see decriminalisation itself as the trigger for this kind of wave of action. A lot of these people will be quite clear that they don't ever want to see abortion be viewed as normal. They want it to become unthinkable.
Myles Houlbrook-Walk: But Dr Flowers says despite this American style attempt to influence Australian politics, the public and politicians by and large remain unperturbed.
Prudence Flowers: Australia is a pro-choice country. For decades, we've had really high pro-choice majorities amongst the public in all kind of public opinion polling. We've kind of moved towards a completely decriminalised model.
Samantha Donovan: That's Dr Prudence Flowers from Flinders University. The reporter, Myles Houlbrook-Walk. Combating crime has emerged as a key priority for voters around the country. Survey data released before the federal election showed crime had jumped from the ninth to the third top issue voters want addressed. And political analysts are expecting it'll also be an issue in coming state elections. Kimberley Price has more.
Kimberley Price: Getting tough on crime is a rising priority for politicians across Australia. As state and territory governments deal with community frustration about crime. Political scientist Paul Williams from Griffith University says, particularly in post-COVID Australia, voters are putting pressure on their leaders.
Paul Williams: There's no doubt that no matter where you live in Australia, which state or territory, city or regions or bush, youth crime is an issue. And I think that it's something that, you know, any state or territory government that doesn't address it is bound to be punished by the electorate.
Kimberley Price: That pressure is leading to some big and often expensive commitments. The latest is Victoria. After passing its stricter bail laws, the government has earmarked $727 million to increase capacity in jails. That'll include a thousand new adult prison beds and 88 new beds in youth detention. Enver Erdogan is the Victorian Minister for Corrections.
Enver Erdogan: We have made significant investments in the physical infrastructure across our corrections and youth justice system. This is about scaling up the system.
Kimberley Price: This comes after elections in Queensland. The Northern Territory and Western Australia all saw campaigns fought with tough on crime policies. There's clear data showing that voters are increasingly looking for politicians that tackle crime. Research from Roy Morgan released during the federal election campaign showed crime was rated the third most significant issue of concern for voters behind cost of living and health. Julian McCrann is the head of the Roy Morgan poll.
Julian McCrann: It really came up as one of the big increases for any of the issues that we measure, which was not expected. But when you think about what's been going on, particularly Queensland, Victoria, Northern Territory, you can understand why.
Kimberley Price: In Victoria, a by-election for the state seat of Prahran in February highlighted this growing political reality.
Julian McCrann: And that swung from the Greens to the Liberals. When you look at the conservative side of politics, they do tend to offer a tougher approach. And when crime is high or perceived to be high, at least it is effective.
Kimberley Price: While governments are toughening up bail laws and promising to put more people behind bars, there are critics who argue that does little to fix the problem. David Murray from Jesuit Social Services believes the Victorian government is reacting to public pressure rather than proven methods.
David Murray: You know, in Victoria, it's a small number. And the police have identified a small group of people who are committing very large numbers of repeat offences. But it's a very tiny number of people, relatively. So, yes, I think the government is, in a sense, captured by this volatile and sort of very dramatised media discussion. We have long advocated and continue to advocate for a stronger investment and commitment to addressing the drivers of criminal behaviour.
Kimberley Price: Professor Williams believes it will be a major focus at upcoming elections.
Paul Williams: Given that the sting seems to be coming out of the cost of living crisis, it's therefore likely that other issues are going to overtake cost of living. And the most likely candidate for a state like Victoria where there have been crime problems is youth justice. So I'm expecting, you know, youth crime to actually dominate the Victorian election.
Samantha Donovan: That's Professor Paul Williams from Griffith Uni, Kimberley Price reporting. Thanks for joining me for PM. I'm Samantha Donovan. We'll be back at the same time tomorrow. Good night.