Macquarie Bank Limited (Macquarie) has paid a penalty of $175,000 to comply with an infringement notice given to it by the Markets Disciplinary Panel (MDP). The penalty was for failing on two separate occasions, to deposit a total of $23 million (being $14 million and $9 million respectively), received from a Client into Client Accounts maintained by Macquarie and designated as Clients’ segregated accounts.
The MDP was satisfied that on October 3, 2012, Macquarie re-opened a Client Account (Account B) for a Client (Macquarie Client). Macquarie failed to designate Account B as a segregated Client Account.
On October 8, 2012, Macquarie set up further Client Accounts for the Macquarie Client by cloning Account B. The cloning of Account B resulted in the establishment of another Client Account (Account A) for the Macquarie Client. Macquarie failed to designate Account A as a segregated Client Account.
On October 10, 2012, Macquarie received $14 million from the Macquarie Client intended for Account A, but which was deposited by Macquarie into the Macquarie non-segregated House Account (Contravention 1).
On October 11, 2012, Macquarie received $9 million from the Macquarie Client intended for Account B, but which was deposited by Macquarie into the Macquarie non-segregated House Account (Contravention 2).
On October 12, 2012, Macquarie’s failure to designate Account A as a segregated Client Account was identified and corrected. Notwithstanding this, Macquarie made no enquires to establish whether the Macquarie Client’s money had been affected by the failure to designate Account A as a segregated Client Account on October 8, 2012.
On October 15, 2012, Macquarie’s failure to designate Account B as a segregated Client Account was identified and corrected. Notwithstanding this, Macquarie made no enquires to establish whether the Macquarie Client’s money had been affected by the failure to designate Account B as a segregated Client Account on October 3, 2012.
On October 17, 2012, Macquarie’s futures division enquired with Macquarie’s finance division about a $23 million movement from non-segregated House Accounts to segregated Client Accounts in the futures balance sheet. The explanation provided was that the error resulted from the redesignation of Account A and Account B to segregated Client Accounts on 12 and 15 October 2012 respectively. Notwithstanding this, Macquarie made no enquiries to establish whether the Macquarie Client’s money had been affected by the failure to designate Account B and Account A as segregated Client Accounts on 3 and 8 October 2012 respectively.
On October 25, 2012, $23 million (comprising the $14 million and $9 million received by Macquarie from the Macquarie Client on 10 and 11 October 2012 respectively) was moved from Macquarie’s House Account into the Macquarie Client’s segregated Client Account after a discrepancy was noted by a Macquarie delegate and escalated to senior management.
By reason of Macquarie’s failure to deposit monies received from the Macquarie Client into Client Accounts maintained by Macquarie and designated as a Clients’ segregated account on October 10 and 11, 2012 respectively, the MDP had reasonable grounds to believe that Macquarie twice contravened Rule 2.2.6(a) of the ASIC Market Integrity Rules (ASX 24 Market) 2010 (MIR 2.2.6(a), and thereby contravened subsection 798H(1) of the Corporations Act 2001 (Corporations Act) which requires compliance with the market integrity rules. The MDP issued Macquarie with an infringement notice specifying a total penalty of $175,000.
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