Macquarie Bank is being sued by the corporate regulator for failing to monitor the conduct of third parties, including a convicted financial adviser who embezzled $2.9 million dollars.
The case of Ross Hopkins, a third-party adviser who stole superannuation funds from 13 clients, has been used by ASIC as the headline example but the regulator alleges Macquarie also has insufficient monitoring of its bulk transaction system.
The regulator claims the system should have included a fraud monitoring system and undergo manual checks to confirm transactions are legitimate.
ASIC deputy chair Sarah Court said the ASIC case was not focused on Hopkins’ conduct but multiple failures by Macquarie to prevent and detect unauthorised transactions.
“Macquarie failed to properly detect and prevent these unauthorised fee transactions, many of which were over $10,000 each,” she said in a media release Tuesday morning. “Mr Hopkins’ conduct is an example of what can go wrong when banks do not properly monitor their systems and implement appropriate processes.”
Macquarie remediated Hopkins’ clients approximately $3.5 million after engagement with ASIC.
‘Deeply stupid’
Hopkins was a financial adviser and sole director of QWL in Sydney which provided clients with financial advice including dealing in securities and advising on self-managed superannuation funds.
Between 14 October, 2016 and 8 October, 2019, he was a financial adviser with almost complete control of his clients’ super which allowed him to transact on their accounts.
It was found he used his clients’ funds for his own benefit, such as holidays, rent, paying his own credit card debts and repaying personal loans.
Hopkins was banned from financial services last year and sentenced to six years prison. In delivering the sentence, the judge said Hopkins was a “trusted financial adviser”, managing funds pretending it was business-like, lawful and profitable.
He described Hopkins’ behaviour as “deeply stupid” noting that “being stupid is no defence or mitigation”.
However, in what may impact ASIC’s case, the judge observed that Hopkins’ conduct involved positive steps to avoid detection and “numerous misrepresentations and concealments”.
