The UK Financial Conduct Authority (FCA) on 26 November 2024 fined the London branch of Macquarie Bank Limited just over £13 million for serious control failures that allowed a trader to conceal trading losses by recording fictitious trades.
The regulator found that a relatively junior trader on the branch's Metals and Bulks Trading Desk recorded 426 fictitious trades on Macquarie's internal systems from June 2020 until the activity was discovered in February 2022. The trades were entered to conceal trading losses the trader had incurred, and unwinding them cost Macquarie almost $58 million. The conduct went undetected for around 20 months.
PRINCIPLE 3 BREACH
The FCA found that the branch had breached Principle 3 of its Principles for Businesses, which requires firms to take reasonable care to organise and control their affairs responsibly and effectively, with adequate risk management systems. It identified deficiencies in the branch's systems and controls relating to the monitoring and oversight of trader positions, as well as failures in its risk management framework.
Macquarie settled at an early stage of the investigation and therefore qualified for a 30% discount. Without the discount, the penalty would have exceeded £18 million. The FCA said Macquarie had shown a high level of cooperation, which extended to its conduct during the settlement process.
ACTION AGAINST THE TRADER
The FCA also took action against the trader, banning him from working in the financial services industry on the grounds that he had acted dishonestly and without integrity.
Macquarie Bank Limited is the banking subsidiary of Australia's Macquarie Group.
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