MBL fined £13m for fictitious trade failings

The Financial Conduct Authority (FCA) has fined Macquarie Bank Limited (MBL) £13m for serious failings that allowed one of its employees to record over 400 fictitious trades.

Between June 2020 and February 2022, Travis Klein, a trader based on MBL’s London metals and bulks trading desk, was able to record and take steps to conceal over 400 fictitious trades on MBL’s internal systems in a bid to hide his trading losses.

Due to weaknesses in MBL’s systems and controls, some of which the firm had been previously been made aware of, the trades were not detected earlier.

Despite knowing of these weaknesses, the FCA found that MBL failed to put effective and timely plans in place to fix them.

As a result, Klein, a relatively junior trader, was able to bypass three key internal controls without detection over 20 months.

He has been banned from the financial services industry by the FCA for acting dishonestly and without integrity. He would have been fined £72,000 if his application for serious financial hardship had not been successful.

The fictitious trades cost MBL an estimated $57.8m (£45.9m) to unwind but did not affect customers or the market overall.

The FCA said that if MBL had taken timely action to plug these gaps on their systems and controls, this cost could have been substantially reduced or avoided altogether.

Joint executive director of enforcement and market oversight, Steve Smart, 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."



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