Macquarie fined £13m by City watchdog after fake trades

Fake trades were not detected earlier because of ‘significant weaknesses’ in the bank’s systems and controls, the regulator said.

Henry Saker-Clark
Tuesday 26 November 2024 11:03 GMT
Macquarie Bank has been fined £13 million by the UK financial watchdog over fake trades (Alamy/PA)
Macquarie Bank has been fined £13 million by the UK financial watchdog over fake trades (Alamy/PA)

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The UK’s financial watchdog has fined Macquarie Bank Limited £13 million after one of its London metals traders booked hundreds of fake trades to cover up losses.

The Financial Conduct Authority (FCA) handed out the penalty for “serious failings” by the bank to allow the employee to record more than 400 fake trades.

It said Travis Klein, a Macquarie trader at its London metals and bulks trading desk, was able to record and take steps to conceal the fictitious trades in the bank’s internal systems between June 2020 and February 2022 to hide his trading losses.

The fake trades were not detected earlier because of “significant weaknesses” in the bank’s systems and controls, the regulator said.

Mr Klein has also been banned from the financial services industry by the FCA and it would have fined him £72,000 if his application for serious financial hardship had not been successful.

The FCA said the fake trades cost Macquarie around 57.8 million US dollars (£45.9 million) to unwind.

But Macquarie stressed that the unauthorised trading did not affect clients or the wider market, and had no material financial impact to the group.

Steve Smart, joint executive director of enforcement and market oversight at the FCA, said: “MBL’s ineffective systems and controls meant that one of its employees could, at least for a time, hide trading losses which cost the firm millions to unwind.

“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.”

a spokesman for Macquarie said: “Macquarie Bank Limited, London Branch, acknowledges the FCA’s final notice and the associated financial penalty.

“This follows Macquarie’s detection, in February 2022, of a period of unauthorised trading by an individual previously employed by Macquarie, which was self-reported by Macquarie to relevant regulators.

“Macquarie takes these matters very seriously and understands the importance to all stakeholders.

“As noted by the FCA, we have displayed a high level of co-operation throughout their investigation.

“We have focused significant resources on addressing learnings from the incident and implemented a series of improvements to our control environment in response to the incident.”

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