Source : THE AGE NEWS
The corporate regulator reckons Macquarie – once the millionaires factory but now the multimillionaires factory – is long on hubris but short on its regard for compliance. For his part, Australian Securities and Investments Commission chairman Joe Longo is long on frustration and short of patience with the financial services group.
ASIC has taken three regulatory potshots at Macquarie over the past 12 months, but on Wednesday it pulled out the big guns – alleging the firm’s failures have led to a misinformed and misled financial services market over a 14-year period.
Macquarie Group CEO Shemara Wikramanayake.Credit: Louie Douvis
That lengthy period is both staggering and a poor reflection on Macquarie and regulators.
But ASIC has turned apex predator with its decision to take alleged misreporting of the number of “short sales” Macquarie traded to the Supreme Court.
“[Macquarie Securities’] repeated systemic failure to detect and resolve these issues indicated serious neglect of its systems and disregard for operational controls and technological governance,” Longo said.
He isn’t having “the cat ate my homework” excuse that it was a technical error. Even if one agrees that there was nothing deliberate about Macquarie’s alleged contraventions of corporate law, it is the firm’s responsibility to have the proper systems in place and the governance oversight to avoid such contraventions.
Longo clearly wants to make an example of this home-grown and high-profile investment bank that has long polarised public opinion. There are those who admire, aspire to and are awed by Macquarie’s success as a money-making machine and a manufacturer of incredibly wealthy bankers.
It is the ultimate meritocracy that rewards success through its bonus system, allowing its high-performing operatives to eat what they kill.
Such is Macquarie’s focus on rewarding financial success that it elevated its former rainmaker – Shemara Wikramanayake – to chief executive seven years ago.
Unsurprisingly, there are plenty who find Macquarie’s supercharged style of corporate capitalism distasteful. They see that culture of success as one more aligned with greed – creating an army of Gordon Gekkos, the fictional character from Hollywood’s 1987 movie Wall Street who famously introduced the world to the boastful but cringeworthy phrase “greed is good”.
Unsurprisingly, there are plenty who find Macquarie’s supercharged style of corporate capitalism distasteful.
For a regulator, Macquarie makes a perfect target. The membership of its board reads like a Debrett’s guide to regulatory and corporate Australia – among them its chairman, Glenn Stevens, the former governor of the Reserve Bank of Australia, and Wayne Byres, former chair of the Australian Prudential Regulation Authority.
After one of last year’s run-ins with the corporate regulator, Longo warned the group that its executives and board needed to reflect on what he described as a reckless disregard for compliance standards.
Joe Longo, the chairman of corporate regulator ASIC, is frustrated by Macquarie.Credit: Louise Kennerley
So here is a bit of a recap on regulatory speeding tickets issued to Macquarie and its business units over the past year.
Last week, ASIC placed additional licence conditions on Macquarie Bank after what it called “more than 10 years of compliance failures”.
Last September, ASIC fined Macquarie Bank Limited a record $4.995 million for failing to prevent suspicious orders being placed on the electricity futures market.
In April 2024, the Federal Court ordered Macquarie Bank Limited to pay $10 million for failing to have effective controls to prevent and detect unauthorised fee transactions conducted by third parties, such as financial advisers.
Sure, most financial services operate under a plethora of regulations and laws globally and will fall foul of some over time.
Actor Michael Douglas as Gordon Gekko, the fictional character from the Hollywood movie Wall Street who made famous the phrase “greed is good”.
But for Macquarie, this many times and for more for almost a decade and a half?
ASIC’s action for this latest alleged breach could cost Macquarie north of $700 million – at least in theory.
Ultimately, the fine will likely be a small fraction of that. It will certainly be less than the reputation damage the mighty Macquarie will sustain.
That’s what happens when a company so frustrates a regulator whose chairman, a public servant, earns about $800,000 a year – a small fraction of the $24 million Macquarie’s Wikramanayake takes home.
The Business Briefing newsletter delivers major stories, exclusive coverage and expert opinion. Sign up to get it every weekday morning.
