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Australia's Macquarie faces fines over failed Cayman fund

Published 23/06/2016, 11:01 am
© Reuters.  Australia's Macquarie faces fines over failed Cayman fund
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SYDNEY, June 23 (Reuters) - Australia's top investment bank Macquarie Group MQG.AX on Thursday said it had failed to exercise "sufficient care and diligence" when managing a A$30 million ($22.5 million) investment in a Cayman Islands-based fund that went bust.

The corporate regulator is seeking penalties against Macquarie Investment Management Ltd (MIML) for failing to comply with its duties, including not adequately addressing risks associated with some investment decisions and allowing members to redeem or withdraw money when the fund was illiquid.

MIML said in a statement that in August 2014 it learned that the Artefact fund had made an illiquid investment, prompting MIML to suspend applications and redemptions.

It then terminated the fund, returned all the liquid assets to investors and put "significant resources" into realising the remaining illiquid assets, it added. The entire A$30 million had now been returned to investors.

The Supreme Court of New South Wales will hear submissions from corporate regulator the Australian Securities and Investment Commission (ASIC) as well as MIML before determining whether the bank should pay any penalties.

The case against Macquarie is another blow to Australia's banking sector after a series of scandals that have fuelled calls for a high-powered judicial probe into the financial industry.

ASIC has recently started proceedings against three of Australia's four major banks for allegedly manipulating benchmark interest rates. ($1 = 1.3317 Australian dollars)

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