The Australian Securities and Investments Commission (ASIC) has launched fresh legal action against Macquarie Group Limited, alleging the A$82 billion financial services firm engaged in misleading conduct over its failure to report up to 1.5 billion short sales spanning 15 years. The case marks ASIC’s first court action concerning short-sale reporting failures, and comes just one week after the regulator imposed extra licence conditions on Macquarie Bank over separate compliance breaches.
ASIC alleges that Macquarie failed to accurately report at least 73 million short sales between December 2009 and February 2023, potentially impacting between 298 million and 1.5 billion trades. Chairman Joe Longo described the enforcement action as part of ASIC’s broader concern over systemic weaknesses and poor remediation practices across Macquarie Group.
Legal action follows longstanding disclosure failures
ASIC filed the action in the New South Wales Supreme Court, claiming Macquarie breached its obligations under the Corporations Act by consistently underreporting short sale volumes. The period under review stretches from the post-global financial crisis era to early 2023, during which Macquarie allegedly misrepresented short sale data due to “systems-related issues”.
The regulator contends that these failures were not isolated or minor, but stemmed from longstanding deficiencies in operational systems and controls. The conduct, ASIC claims, was not detected internally for over a decade, reflecting “serious neglect” of technological governance.
Background: Short selling and regulatory context
Short selling is a market practice whereby traders sell securities they do not own, expecting to repurchase them at a lower price. It is legal but highly regulated, given its potential to affect market integrity.
Ironically, Macquarie had previously lobbied for a ban on short selling during the 2008 financial crisis and was temporarily shielded by ASIC from being targeted by short sellers. The current allegations suggest that while Macquarie continued engaging in short sales on non-financial stocks, it failed to meet reporting standards required by law.
Regulatory scrutiny intensifies with fourth action in a year
This is the fourth regulatory move by ASIC against Macquarie in 12 months. Only last week, ASIC imposed additional conditions on Macquarie Bank’s Australian Financial Services Licence (AFSL), citing “multiple and significant” compliance failures.
In September 2024, Macquarie was fined a record A$4.9 million by ASIC’s markets disciplinary panel for failing to prevent suspicious trading activity in the electricity futures market. The bank is also being compelled to appoint an independent expert to review its futures dealing and derivatives reporting practices.
Macquarie’s response and financial performance
Macquarie disclosed that it had self-reported the short sale reporting issue to ASIC in late 2022 and is currently reviewing the regulator’s claims. However, the company declined to comment further as the matter is now before the court.
“Macquarie takes its compliance obligations very seriously and continues to invest in programs to further improve systems and controls across the group,” a spokesperson said.
Despite the regulatory setbacks, Macquarie reported A$3.7 billion in full-year net profit and revealed chief executive Shemara Wikramanayake’s total remuneration fell slightly to A$24 million, down from A$25.3 million the prior year.