ASIC sues Macquarie Bank after $2.9m embezzlement

The corporate watchdog is taking legal action against Macquarie Bank for failing to properly monitor and control transactions by financial advisers in their clients’ accounts, after a former adviser exploited the bank’s systems to embezzle $2.9 million.

The Australian Securities and Investments Commission on Tuesday launched Federal Court proceedings against Macquarie, over how it set up cash management accounts, which could be accessed not only by clients but also third parties, such as financial advisers.

A photo of Ross Hopkins from 2005. He was sentenced last year to at least four years in prison, after pleading guilty to 15 dishonesty offences involving his handling of clients’ money.Credit:Andrew Quilty

The watchdog said there was only limited monitoring by the bank of the transactions, which were meant to be for expenses such as an advisers’ fees. The case comes after a former adviser who used Macquarie’s systems, Ross Andrew Hopkins, was last year sentenced to at least four years in prison, after pleading guilty to 15 dishonesty offences involving his handling of clients’ money.

ASIC deputy chair Sarah Court said the watchdog’s case against Macquarie was not focused on Mr Hopkins’ conduct, but rather on “multiple failures by Macquarie to take proper steps to monitor, detect and prevent unauthorised transactions.“

“Mr Hopkins misused Macquarie’s systems by processing transactions using his fee authority to steal client funds. Macquarie failed to properly detect and prevent these unauthorised fee transactions, many of which were over $10,000 each,” Ms Court said.

“Mr Hopkins’ conduct is an example of what can go wrong when banks do not properly monitor their systems and implement appropriate processes.”

ASIC is alleging Macquarie breached its obligation to provide financial services efficiently, honestly and fairly, and that it promoted the cash management accounts in false or misleading way.

A Macquarie spokeswoman noted the ASIC court action, and said it had cooperated with the watchdog’s investigation into the matter, and affected clients had been compensated.

“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,” the spokeswoman said.

“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.”

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