Macquarie Securities Australia Limited (MSAL), one of Australia’s largest financial services groups, has been ordered to pay a penalty of $35m ($24m) by the New South Wales Supreme Court for misreporting tens of millions of short sales for more than a decade.
Multiple systems-related failures have been cited as the main cause for the misconduct that took place between December 11, 2009, and February 14, 2024. The firm failed to correctly report at least 73 million short sales during that period.
“The Court also found that MSAL engaged in misleading conduct in relation to its misreporting,” Australia’s securities regulator ASIC said.
The regulator said accurate reporting was crucial to maintain trust and confidence in the country’s financial markets. “Short sale data plays a critical role in informing investors, regulators, and governments about market sentiment and potential investment risks,” it added.
Despite multiple internal reviews, the firm failed to detect and fix a number of “serious deficiencies” in its systems, procedures, and controls, which led to inaccurate data being released to the market.
MSAL has also been asked to allow an independent expert to review its systems, procedures, and controls. It will also have to pay the legal costs incurred by ASIC.
ASIC Chair Joe Longo said: “Regulators and investors rely heavily on short sale data to understand market conditions and identify emerging risks, particularly at times of market volatility and uncertainty.”
He added that MSAL, as one of Australia’s major financial services providers with significant reporting obligations, is expected to be setting the standards for others, and should therefore have done better.
Deceptive conduct
ASIC said the case was a good example of when firms fail to keep a close eye on internal critical systems and controls, leading to compliance failures and even deceptive conduct.
According to the court, MSAL:
- “Engaged in misleading or deceptive conduct in relation to the misreporting.”
- “Failed to have in place adequate risk management systems.”
- “Failed to have appropriate supervisory policies and procedures.”
- “Failed to have and maintain necessary organisational and technical resources,” and
- “Failed to provide accurate regulatory data to the market operator.”
The court said the firm has acknowledged that its conduct resulted in harm to traders and investors, and the ASX market in general, and added that the financial penalty “will provide the necessary sting or burden to achieve the objects of specific deterrence and general deterrence.”
Macquarie Securities is “a global financial services group operating in asset management, retail and business banking, wealth management, as well as advisory, and risk and capital solutions across debt, equity, financial markets and commodities,” according to its website. It was founded in Sydney in 1969.
ASIC initially started civil proceedings against MSAL in May 2025. At the time, the firm said in a press release, “The reporting issues identified in the proceedings have been remediated with additional controls implemented. Macquarie takes its compliance obligations very seriously and continues to invest in programs to further improve systems and controls across the Group.”