For more than a decade, Australia’s largest investment bank allegedly misreported hundreds of millions (and potentially billions) of short sale transactions.
Now the corporate watchdog has had enough.
The Australian Securities and Investments Commission (ASIC) has filed civil proceedings in the NSW Supreme Court against Macquarie Securities Australia Limited (MSAL), the brokerage arm of Macquarie Group. The regulator alleges repeated and systemic breaches of short selling laws over a 15-year period, a failure that could result in penalties reaching up to $783 million.
According to ASIC, MSAL inaccurately reported up to 1.5 billion short sale transactions between December 2009 and February 2024. These errors, it claims, affected at least 321 securities and were the result of long-running systems failures that were either undetected or unresolved for years.
The case has drawn sharp criticism from ASIC Chair Joe Longo, who said the alleged misconduct was symptomatic of “complacency and hubris” within the firm. “MSAL’s 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 in a statement.
What happened and why it matters
Australia’s short selling disclosure regime was introduced in 2009 in the wake of the global financial crisis, to improve transparency in financial markets. Under the Corporations Act, brokers must accurately report when they facilitate short sale orders – that is, the sale of securities they do not yet own – so regulators and investors can track market behaviour and risks.
Yet ASIC claims MSAL failed to meet these obligations for well over a decade. In some instances, reported volumes were off by more than 50 percent. While some of the discrepancies were small on a per-transaction basis, the sheer volume and duration of misreporting led to a massive cumulative effect.
“Accurate and reliable data underpins the integrity of, and confidence in, Australia’s financial markets,” said Longo. “Investors expect reliable information to analyse market movements and inform their investment decisions.”
The problems stemmed from a combination of outdated systems, software errors, and poor data governance, ASIC alleges. In addition to the 1.5 billion misreported short sale transactions, the regulator says Macquarie also failed to correctly report more than 633,000 order events between November 2022 and March 2023.
A pattern of enforcement
The lawsuit is the latest and most severe in a string of regulatory actions against Macquarie in the past year. In 2024, the firm incurred a $10 million fine for unauthorised customer transactions and a further $5 million for breaches in the electricity futures market.
ASIC’s action this month follows a recent move to impose additional conditions on Macquarie Bank’s Australian Financial Services licence, citing ongoing concerns with the group’s risk culture and remediation efforts.
The Financial Review described the lawsuit as a sign ASIC had lost patience with “incompetence,” noting that the regulator’s frustration has been building for some time.
A separate analysis by ABC News said the action “marks a turning point” in ASIC’s oversight of large institutions, and may signal a more aggressive posture following criticism of the regulator’s performance after the 2019 banking royal commission.
Macquarie’s response
In a statement issued after the court filings, Macquarie said it was reviewing ASIC’s claim and that it would not comment further while the matter was before the court. The bank added that it takes its compliance obligations seriously and continues to invest in programs to improve systems and controls across the group.
Despite this, shares in Macquarie Group fell by 1.6% following the announcement, underperforming the broader market. The firm, which reported a $3.7 billion net profit in FY2025 with a market capitalisation of about $53 billion (as of May 2025), has so far avoided commenting in detail while legal proceedings are underway.
Industry implications
Although the allegations are specific to Macquarie, the case raises broader questions about compliance and technological maturity across Australia’s banking sector.
“Compliance systems are only as good as the culture that supports them,” said ASIC Commissioner Alan Kirkland in a separate interview reported by Financial Newswire. “This isn’t just about software errors. It’s about governance, oversight, and accountability.”
Macquarie’s case follows similar high-profile enforcement actions against other major Australian banks. In recent years, Westpac was fined a record $1.3 billion for anti-money laundering breaches, and NAB faced sanctions for failing to properly identify clients at risk of financial abuse.
As the sector continues to invest in digital transformation, ASIC’s actions highlight the growing importance of operational integrity in back-end systems, not just customer-facing platforms.
“The notion that legacy systems can be overlooked or tolerated no longer holds water,” said one regulatory analyst quoted by The Sydney Morning Herald. “The regulator is making it clear that firms will be held responsible for the integrity of their infrastructure, just as much as their conduct.”
The road ahead
ASIC is seeking a range of penalties, including financial sanctions and court-enforced improvements to MSAL’s internal systems. It is also pursuing declarations that Macquarie breached key provisions of the Corporations Act and engaged in misleading conduct.
According to ASIC, the scale of the misreporting and the length of time it continued – despite internal awareness of systems failures – warrants a strong response. The regulator noted that it raised concerns with Macquarie as early as 2019, but received little assurance that problems were being addressed comprehensively.
That perception is echoed across several media analyses. As noted by The Age, ASIC appears to be ”out for blood”, a phrase used not to suggest hostility, but to reflect the seriousness with which it now views compliance failures at systemically important institutions.
While it is too early to determine the outcome of the case, observers say it could mark a defining moment in ASIC’s enforcement history, and in how the financial services sector prioritises operational resilience.
