UK regulator fines Macquarie Bank over serious trading control failures
Investing.com -- The UK’s Financial Conduct Authority has imposed a £13 million fine on Macquarie Bank Limited's London branch for serious control failures that enabled a trader to execute over 400 fictitious trades, concealing trading losses for nearly two years.
The fine was reduced from £18.6 million after the bank agreed to resolve the matter, qualifying for a 30% discount.
Between June 2020 and February 2022, Travis Klein, a trader on the bank's London Metals and Bulks Trading Desk, manipulated internal systems to hide his trading losses through fake trades.
These actions cost the bank about $57.8 million to unwind, although the FCA clarified that the fraudulent activity did not impact customers or the broader market.
The regulator found that Macquarie's systems were insufficient to prevent or detect these activities, despite the bank being previously alerted to weaknesses in its control framework.
Specifically, Klein bypassed three critical internal safeguards without detection, exposing vulnerabilities in the bank’s compliance infrastructure. The FCA said that earlier interventions could have mitigated or avoided these losses.
Klein, who was employed by Macquarie since 2017 and certified for client-dealing roles under FCA rules, was banned from the financial services industry for acting dishonestly and without integrity.
While the FCA initially intended to fine him £72,000, the penalty was waived due to his financial hardship.
Steve Smart, joint executive director of enforcement at the FCA, noted that Macquarie Bank's inadequate systems and controls allowed an employee to temporarily conceal trading losses, ultimately costing the firm millions to rectify.
He added, “This should serve as an example to those we regulate; risk can come from within. You need the right systems to identify it so it can be tackled early.”
Macquarie Bank operates globally, with its London branch authorized by the FCA since 2001.
Source: Investing.com
