ASIC's soft touch for Macquarie
ASIC has finally taken aim at Macquarie's market transgressions, but what took the corporate cop this long?
The Australian Securities and Investment Commission's decision today to sue Macquarie Securities over the alleged failure to report at least 73 million short sales – the reporting of which is one of the key pillars of market integrity – is a major test of Australia's standing in global capital markets.
The volume of shares sold "short" is a key piece of market data that influences investment decisions by major local and global investors. The allegation that up to 1.5 billion shares that were "short" but not reported as such means, as ASIC claimed yesterday, that "Macquarie's failures may have led to the financial services industry relying on misleading and false information for over 14 years".
Of course, this matter is now before the courts and Macquarie has the right to mount a strenuous defence against ASIC's allegations. The company said that it "takes its compliance obligations very seriously and continues to invest in programs to further improve systems and controls".
In the view of many market participants, evidence that regulation of Australia's financial markets had plunged to a new low arrived just one week ago when ASIC announced it had imposed "additional conditions" on Macquarie Bank's Australian financial services licence. (This is a totally separate case to the one now before the courts).
ASIC said that it had imposed new licence conditions after discovering the Millionaires Factory had misreported 375,000 over-the-counter derivatives transactions, had failed to detect and prevent "suspicious trading" and had engaged in "withholding orders" from the ASX24 market.