Macquarie share price falls as regulatory storms in US, Europe, and Australia build

The Macquarie Group Ltd (ASX: MQG) share price fell 2.3% to $125.59 today and the stock was the second most heavily traded on the S&P/ ASX2oo (ASX: XJO) by cash volume behind only BHP Billiton Limited (ASX: BHP) on the back of some regulatory criticism the bankers received.

Macquarie itself released no price sensitive news to the market but the stock is under selling pressure on the back of widespread news reports that the regulator ASIC has complained again about how long Macquarie and other big banks like Commonwealth Bank of Australia (ASX: CBA) and Westpac Banking Corp (ASX: WBC) are taking to finish reviews into whether or not they charged clients fees for no services.

So far Macquarie has enhanced its teflon reputation by escaping the worst of the fallout from the Royal Commission and other scandals such as the BBSW rate rigging fines to hit the big banks, but this doesn’t mean it’s immune to the regulatory storm hitting the sector.

The famously secret organisation is also reportedly facing an investigation by the US regulator the SEC into allegations one of its US subsidiaries deliberately mislead investors in one of its investment funds. The SEC has a far tougher reputation than ASIC and this regulatory problem is not its biggest.

In Germany the bank is being investigated for its alleged part in a tax avoidance scam alleged by German public prosecutors working on behalf of its tax office.

According to German newspaper Handelsblatt the investigation will classify both Macquarie’s former and current CEOs as ‘persons of interest’ in their investigation.

The paper reports that the allegations involve ‘dividend stripping’ schemes where investors borrowed money to buy stocks with the rights to dividends before selling them at a potential profit (including the dividend) straight afterwards under a ‘tax optimisation” scheme set up by Macquarie’s German operations.

According to the German papers dividend stripping of this sort has been illegal since 2012 in Germany as a nation with famously conservative stock exchange regulations and public approaches to risk.

It’s not unusual for Macquarie to face regulatory investigations, although it appears it now has two serious ones overseas and one more minor one at home for investors to factor into the investment case.

The bank is still guiding for profit growth up to 15% for the fiscal year ending March 31 2019, with it due to hand down its full year result in May 2019.

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Motley Fool contributor Tom Richardson owns shares of Macquarie Group Limited.

You can find Tom on Twitter @tommyr345

The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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