The Macquarie Group Ltd (ASX: MQG) share price is in the green today despite ASIC commencing legal proceedings against the company.
Macquarie shares are trading at $207.355 today, a 0.61% gain. For perspective, the S&P/ASX 200 Financials Index (ASX: XFJ) is also up 0.72% at the time of writing.
So why is ASIC taking action against Macquarie?
What is ASIC alleging?
Macquarie is facing a legal challenge from ASIC in the Federal Court. ASIC is alleging "limited monitoring" by Macquarie of transactions made via its bulk transaction system using a fee authority.
The regulator claims the transactions did not pass through a fraud monitoring system or undergo manual checks to confirm the transactions were for fees.
ASIC alleges $2.9 million in unauthorised withdrawals by former financial adviser Ross Andrew Hopkins impacted Macquarie customers. Hopkins has now been convicted. ASIC deputy chair Sarah Court added:
ASIC's case is not focused on Mr Hopkins' conduct but rather on alleged multiple failures by Macquarie to take proper steps to monitor, detect and prevent unauthorised transactions.
Macquarie has remediated the clients of Mr Hopkins about $3.5 million on an ex-gratia basis since engagement with ASIC.
In a statement, Macquarie said it notes the Federal Court proceedings filed by ASIC. The company said:
Macquarie has cooperated with ASIC's investigation into this matter. Macquarie treats the security of its clients' accounts with the utmost seriousness, and has continued to introduce new controls and processes to respond to the evolving external fraud environment.
ASIC's court filing notes that this issue arose in relation to 13 clients of an independent financial adviser between 2016 and 2019, who has since pleaded guilty to fraud. Following the independent adviser's failure to compensate his clients for their losses, Macquarie fully reimbursed the 13 clients.
In other news, Wavestone Capital principal and portfolio manager Raaz Bhuyan recently predicted Macquarie Group will have a "cracker result" due to gas prices in Europe and the US. He also commended the company's management team.
Macquarie recently modified its portfolio of ASX shares in response to the Ukraine crisis.
Macquarie share price snapshot
The Macquarie share price has soared 36% in the past year while it is up 0.91% year to date.
In contrast, the S&P/ASX 200 Index (ASX: XJO) has returned about 10% in the past year.
Macquarie Group has a market capitalisation of about $79 billion based on its current share price
