ASIC initiates civil penalty proceedings against Macquarie (ASX:MQG)

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Highlights

  • ASIC has sued Macquarie Group over allegations of failure to adequately monitor withdrawals by third parties, such as financial advisers, on their customers’ cash management accounts.
  • The Court has not yet scheduled the date for the hearing of the case.
  • Macquarie Group shares were spotted trading 0.349% higher at AU$206.810 per share on ASX during the intraday trading session on Tuesday.

The share price of Macquarie Group Limited (ASX:MQG) traded a tad higher at AU$206.810 per share on ASX during the early morning hours of trade on Tuesday (5 April 2022). 

Macquarie shares gathered investors’ attention after the news that the Australian corporate regulator, the Australian Securities and Investments Commission (ASIC) has initiated civil penalty proceedings in the Federal Court against Macquarie Bank Ltd. The reason for ASIC’s legal action against Macquarie Group is the company’s alleged failure to adequately monitor and control transactions by third parties.

On Tuesday, the corporate watchdog ASIC claimed that the failures by Macquarie violated its obligations as a financial services provider to ensure its financial services were provided efficiently, honestly and fairly.

This came to the forefront after the ASIC issued a media release in this regard on Tuesday (5 April 2022). Macquarie shares have gained 35.90% over the last one year, while its share price is down 2.14% year-to-date (YTD).

Macquarie Group Limited is an ASX-listed financial service provider. Macquarie provides banking, financial, advisory, investment, and funds management services.

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 What are the allegations levelled by ASIC against Macquarie Group?

ASIC has alleged that there was limited monitoring of transactions made through the Group’s bulk transaction system using a ‘fee authority’. As per ASIC, these transactions did not pass through a fraud monitoring system.

As per the allegations levelled by ASIC, this included AU$2.9 million in unauthorised withdrawals by convicted financial adviser Ross Andrew Hopkins. However, the financial regulator said the alleged failures spanned withdrawals linked to more than one financial adviser.

 

Following engagement with ASIC, from December 2021, Macquarie remediated Hopkins’ clients roughly AU$3.5 million on an ex-gratia basis.

The Court has not yet scheduled the date for the hearing of the case.

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ASIC has claimed that Macquarie made false or misleading representations in promoting and offering limited third-party access over cash management accounts. The Australian regulator is seeking declarations, financial penalties and other relief from the Court.

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