Macquarie trader hid 400+ fictitious trades for 20 months — £13M FCA fine, $58M unwind

In June 2020, supervisors at Macquarie's London metals and bulks trading desk asked junior trader Travis Klein to de-risk his trading book. Instead he began recording fictitious trades on the firm's internal systems to conceal loss-making positions, entering more than 400 of them between June 2020 and February 2022.

Klein told the regulator he 'felt he could not disappoint supervisors', and the fictitious trades gave the appearance that his loss position was lower than it was. His most common technique was to enter trades with a clearing date set a day or more in the future and continually roll that date forward.

The FCA found the activity escaped detection because of deficiencies in Macquarie's oversight and monitoring of trader positions, including a futures reconciliation process that excluded future-dated clearing trades and weak verification of broker quotes. These design issues had been identified before the trading began but processes were left largely unchanged, and a July 2020 red flag was not followed through to resolution.

Macquarie became aware of the activity in February 2022 through an internal risk report and unwound the positions over the next two days, at a cost of nearly US$58 million. The FCA fined the London branch £13,031,400, reduced by 30% for Macquarie's early agreement, and banned Klein from financial services. The incident was not financially material to Macquarie Group.