Macquarie Bank Limited and ASIC have announced that the Federal Court has approved the parties’ proposed resolution of ASIC’s action in relation to an independent financial adviser who misappropriated client funds through Macquarie’s CMA between 2016 and 2019.
In Australian Securities and Investments Commission v Macquarie Bank Limited [2024] FCA 416 the Federal Court has ordered Macquarie Bank Ltd to pay a penalty of $10 million for failing to have effective controls to prevent and detect unauthorised fee transactions conducted by third parties, such as financial advisers, on customer cash management accounts using Macquarie’s bulk transacting facility.
The financial adviser, who was not a Macquarie employee, pleaded guilty to fraud and was convicted in 2021. Following his failure to compensate the clients for their losses, Macquarie fully reimbursed the 13 clients.
Macquarie acknowledged that it had contravened a statutory obligation in connection with the controls to monitor bulk transactions made under third party fee authorities on the CMA.
Macquarie enabled its customers to give third parties, such as financial advisers, stockbrokers and accountants, different levels of authority to transact on their accounts, including a limited authority to withdraw the third party’s fees.
Macquarie also made available to third parties a bulk transacting tool to make multiple withdrawals across multiple customer accounts simultaneously.
Between 1 May 2016 and 15 January 2020, Macquarie failed to implement effective controls to monitor whether third party bulk transactions under the fee authority were actually for fees.
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Author: David Jacobson
Principal, Bright Corporate Law
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About David Jacobson
The information contained in this article is not legal advice. It is not to be relied upon as a full statement of the law. You should seek professional advice for your specific needs and circumstances before acting or relying on any of the content.
