The FCA has fined the London branch of Macquarie Bank £13 million for "serious failings" that allowed one of its employees to record over 400 fictitious trades.
From June 2020 to February 2022, trader Travis Klein was able to record and take steps to conceal the fictitious trades in Macquarie's internal systems in a bid to hide his losses.
The fictitious trades were not detected earlier because of "significant weaknesses" in the bank's systems and controls, some of which the firm had been previously made aware of, says the FCA. Klein was able to bypass three key internal controls without detection for over 20 months.
The fictitious trades cost Macquarie an estimated $57.8 million to unwind but did not affect customers or the market overall.
As well as fining the bank, the FCA has banned Klein from the financial services industry for acting dishonestly and without integrity. He escaped a fine because of serious financial hardship.
Steve Smart, joint executive director of enforcement and market oversight, FCA, says: "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."