Corporate watchdog ASIC alleges Macquarie Securities - Macquarie Group's cash brokering division - failed to correctly report at least 73 million short sales between December 2009 and February 2024.
ASIC estimates the true figure is likely to be between 298 million and 1.5 billion short sales, but the inadequacy of the brokering division's reporting systems makes it impossible to narrow down beyond such a large range.
Short sales refer to selling stock or other securities that an entity does not currently own in the hope of buying at a lower price later on - essentially a bet that the product will decline in value.
The method was used by traders to bet against the financial instruments that were causing the housing bubble that sparked the 2008 global financial crisis, as popularised in the Hollywood film The Big Short.
Reports of short selling can be used by regulators to identify potential market risks before they occur.
It assists in detecting market misconduct and supports market integrity, ASIC chair Joe Longo said.
"This action is timely given significant recent global market volatility. Accurate and reliable data underpins the integrity of, and confidence in, Australia's financial markets," Mr Longo said on Wednesday.
"Investors expect reliable information to analyse market movements and inform their investment decisions."
The legal action in the NSW Supreme Court marks the fourth time ASIC has taken regulatory action against Macquarie Group in just over 12 months.
Earlier in May, ASIC imposed licence conditions on Macquarie Bank for misreporting hundreds of thousands of over-the-counter derivatives trades as well as failing to prevent and detect suspicious trading activity in its futures dealing business.
ASIC is seeking penalties from Macquarie Securities (MSAL) as well as an independent review of its reporting systems to ensure they comply with the law.
Macquarie said the group's brokering division first identified issues with its reporting of short sales and self-reported this to ASIC in late 2022.
"The reporting issues identified in the proceedings have been remediated with additional controls implemented," Macquarie said in a statement.
"MSAL is now reviewing ASIC's claim.
"Macquarie takes its compliance obligations very seriously and continues to invest in programs to further improve systems and controls across the Group."
11°C