Australian regulator sues Macquarie over alleged misreporting of short sales

Australia's corporate regulator has sued top investment bank Macquarie Group, alleging it misreported up to 1.5 billion short sales over a decade and a half, misleading the market and violating rules in place since the financial crisis.

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SYDNEY -

The lawsuit is a major escalation of conflict between Macquarie, Australia's 10th-biggest listed company, and the Australian Securities and Investments Commission (Asic), which has already hit the company with three enforcement actions in the past year.

Macquarie Securities Australia, the brokerage arm of the bank, both omitted and overstated information about its short-sale trades since 2009 by failing to fix software problems, Asic said on May 14.

After the financial crisis, Australia made it compulsory for fund managers to report short-selling trades - where an investor makes a profit when a stock price falls - to improve transparency, and "Macquarie's failures may have led to the financial services industry relying on misleading and false information for over 14 years", Asic chair Joe Longo said in a statement.