Macquarie Bank is being sued by the business regulator for failing to monitor the conduct of third parties, including a convicted financial adviser who embezzled $2.9million.
The case of Ross Hopkins, a third-party adviser who stole the pension funds of 13 clients, was used by ASIC as a prime example, but the regulator alleges Macquarie also has insufficient oversight of its bulk trading system.
The regulator says the system should have included a fraud monitoring system and undergo manual checks to confirm transactions are legitimate.
ASIC Vice President Sarah Court said the ASIC case centered not on Hopkins’ conduct, but on Macquarie’s multiple failures to prevent and detect unauthorized transactions.
“Macquarie failed to properly detect and prevent these unauthorized fee transactions, many of which exceeded $10,000 each,” she said in a press release Tuesday morning. “Mr. Hopkins’ conduct is an example of what can go wrong when banks do not properly monitor their systems and implement appropriate processes.”
Macquarie remedied Hopkins customers for around $3.5 million after its engagement with ASIC.
Hopkins was a financial adviser and sole director of QWL in Sydney, which provided clients with financial advice, including securities trading and advice on self-managed pension funds.
Between October 14, 2016 and October 8, 2019, he was a financial advisor with almost total super control of his clients, allowing him to transact on their accounts.
He was found to be using his clients’ funds for his own benefit, such as vacations, rent, paying off his own credit card debts, and paying off personal loans.
Hopkins was banned from financial services last year and sentenced to six years in prison. In handing down the sentence, the judge said Hopkins was a “trusted financial adviser”, managing funds under the guise of being commercial, legal and profitable.
He described Hopkins’ behavior as “profoundly stupid” noting that “being stupid is neither a defense nor a mitigation”.
However, in what may impact ASIC’s case, the judge observed that Hopkins’ conduct involved affirmative action to avoid detection and “numerous misrepresentations and cover-ups.”