Macquarie Bank fined £13m by UK’s FCA
The UK’s Financial Conduct Authority (FCA) has fined Macquarie Bank Limited, London Branch (MBL), the UK branch of Australian investment bank Macquarie, £13 million for what it calls “serious failings that allowed one of its employees to record over 400 fictitious trades”.
The FCA says the fictitious trades cost MBL an estimated $57.8m to unwind
In a press release this week announcing the fine, the FCA writes: “From June 2020 to February 2022, Travis Klein, a trader based on MBL’s London Metals and Bulks Trading Desk was able to record and take steps to conceal over 400 fictitious trades in MBL’s internal systems in a bid to hide his trading losses.”
The regulator continues: “The fictitious trades were not detected earlier because of significant weaknesses in MBL’s systems and controls, some of which the firm had been previously made aware of. Despite knowing of the weaknesses, MBL failed to put effective and timely plans in place to fix them.”
The FCA adds that it has “banned Mr Klein from the financial services industry for acting dishonestly and without integrity”.
The regulator claims that the fictitious trades “cost MBL an estimated USD $57.8m to unwind but did not affect customers or the market overall”.
Steve Smart, the FCA’s joint executive director of enforcement and market oversight, comments: “MBL’s ineffective systems and controls meant that one of its employees could, at least for a time, hide trading losses which cost the firm millions to unwind.
“This should serve as an example to those we regulate; risk can come from within. You need the right systems to identify it so it can be tackled early.”
Macquarie Group’s statement
In a statement on the FCA’s action, Macquarie Group says that MBL “acknowledges the FCA’s Final Notice and the associated financial penalty”.
“This follows Macquarie’s detection, in February 2022, of a period of unauthorised trading by an individual previously employed by Macquarie, which was self-reported by Macquarie to relevant regulators,” the company adds.
“The unauthorised trading was isolated to one individual. The unauthorised trading did not affect clients, or the market, and no financial benefit or gain was derived by Macquarie or any other party directly from the activity. The incident was not financially material to Macquarie Group and was accounted for and noted in the Macquarie Group financial results for FY2022.
“Macquarie takes these matters very seriously and understands the importance to all stakeholders. As noted by the FCA, we have displayed a high level of cooperation throughout their investigation. We have focused significant resources on addressing learnings from the incident and implemented a series of improvements to our control environment in response to the incident.”
