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Macquarie Securities Australia Limited (MSAL) faces a $35 million fine after admitting to reporting failures for at least 73 million short sales over more than 14 years, although the corporate watchdog that has investigated the issue estimates the real number to be much higher than that baseline.
In the first-ever short-sale reporting case undertaken by the Australian Securities and Investments Commission (ASIC), the regulator started civil proceedings against MSAL in May and estimates the company has misreported between 298 million and 1.5 billion short sales.
With a statement of facts agreed to by MSAL admitting the incorrect reporting of at least 73 million short sales between 11 December 2009 and 14 February 2024, the NSW Supreme Court will be asked to impose a penalty of $35 million on the company in addition to other orders.
The inaccurate reporting was due to multiple systems-related failures, many of which remained undetected for more than a decade.
In addition to the misleading conduct, MSAL has admitted to failures around appropriate supervisory policies and procedures, having and maintaining the necessary organisational and technical resources, and having adequate risk management systems.
MSAL has also admitted to incorrectly reporting regulatory data for more than 633,000 orders submitted to the market operator between 16 November 2022 and 21 March 2023.
"Accurate and reliable data underpins confidence in our financial markets," says ASIC chair Joe Longo.
"ASIC and the market rely on short sale and regulatory reporting data - especially during periods of volatility - to understand market activity and make informed decisions.
"Without accurate data, market transparency is undermined."
Longo says market participants must have the proper systems and processes in place to comply with their regulatory obligations.
"It’s essential for public transparency, market integrity and trust in our system," he adds.
The announcement comes as ASIC has been aggressively pursuing improved systems within markets, including a breakthrough 'circuit-breaker' reform package with ASX Limited (ASX: ASX) to sharpen up the governance, capability, risk management and culture - a move ultimately aimed at improving trust and confidence of Australia's largest market operator.
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