THE PECUNIARY PENALTY TO BE PAID BY MACQUARIE
78 I am persuaded that the agreed penalty of $10,000,000 is an appropriate penalty in all the circumstances, in the sense that I consider that is within the range of possible penalties that the Court could reasonably impose in all the circumstances of the case. I do not suggest that I would necessarily have imposed that precise penalty had I not been confronted with the parties' agreement and joint submissions, though that is essentially beside the point. I am nevertheless satisfied that it is appropriate to make the agreed penalty order for the purposes identified in the Agreed Penalties Case.
79 The main factors relevant to the assessment of an appropriate penalty in this case may be summarised as follows.
80 First, there could be little doubt that the contravention in respect of which the pecuniary penalty is to be imposed was a serious contravention of s 912A(1)(a) of the Corporations Act. It occurred over a 10-month period, though it must, to an extent, be considered in the context of the earlier contravening conduct, being the conduct which occurred before 13 March 2019. The contravention involved quite senior employees of Macquarie, being those employees who had become aware of the inadequacies and deficiencies of the controls that Macquarie had in place and who, it may be inferred, failed to take, or cause others to take, the necessary and appropriate steps to ensure that the inadequacies and deficiencies were appropriately addressed. As a result of the contravening conduct, Macquarie's CMA clients who had granted fee authorities to third parties were at risk of fraudulent activity on their accounts. The contravening conduct in fact resulted in losses to CMA clients as a result of Mr Hopkins's conduct totalling at least $2,938,750, $701,500 of which occurred on or after 13 March 2019.
81 Second, there are nevertheless some features of the contravening conduct that moderate the seriousness of the contraventions. The contravening conduct was not in any relevant sense deliberate or even reckless. Rather, the contravention was the product of a degree of neglect, laxity or inaction on the part of certain employees of Macquarie. The deficiencies and inadequacy of the existing controls in respect of bulk transacting was known to, and recognised by, Macquarie, as was the risk to CMA clients who had granted fee authorities, but not enough was done to address the inadequacies and deficiencies, or eliminate the risks to CMA clients. Macquarie received no direct financial benefit from the contravening conduct, though it could perhaps be said that it avoided, or at least deferred, the cost that was most likely involved in remedying the inadequate controls.
82 Third, the seriousness of the offending conduct does not itself necessarily compel or require the imposition of a very large penalty. As discussed earlier, the purpose for which a pecuniary penalty is imposed is to deter, not to punish. There is no retributive purpose in imposing a pecuniary penalty. Nor is it necessary for the penalty to be proportionate to the seriousness of the offence in the same way that, for example, a criminal sanction must "fit the crime". The features of the contravening conduct that render it a serious contravention are only relevant in assessing the size of the penalty if they suggest that, in light of those features, a larger penalty is required to achieve the purpose of deterrence, both specific and general. In this case, despite the seriousness of the contravening conduct, the fact that the contravention was not deliberate or reckless, let alone contumelious, would tend to suggest that an especially large penalty is not required to achieve specific deterrence.
83 Fourth, there are some factors relating to Macquarie's circumstances that also bear directly on the size of the penalty that is necessary to appropriately secure specific deterrence. Macquarie has not previously been found to have been involved in any contraventions of civil penalty provisions in the Corporations Act or been found to have engaged in any conduct similar to the contravening conduct involved in this matter. It is certainly not a recidivist or recalcitrant contravener. While there is no evidence of any clear or direct expression of contrition or remorse on Macquarie's behalf, nevertheless some degree of contrition can be inferred from the fact that Macquarie ultimately admitted its contravention. It also cooperated, to an extent, with ASIC's investigation and displayed a willingness to facilitate the course of justice by making admissions and joining in the Agreed Statement of Facts and Admissions and joint submissions.
84 Fifth, Macquarie is a very large and very profitable corporation. If, as has been said to be the case, the court must fix a penalty which puts a price on the contravention that is sufficiently high to deter repetition, the size and financial capacity of Macquarie would tend to suggest that anything other than a very large penalty would have little or no deterrent effect in respect of Macquarie itself. A penalty that might be seen as very being large and as having a significant deterrent effect by many corporations would be likely to be considered to be piffling to Macquarie having regard to its size and financial resources. That said, it would plainly be wrong to impose a very large penalty on Macquarie in respect of this contravention simply because it is a large and profitable corporation.
85 Sixth, in fixing an appropriate penalty in the case of a contravention like the one the subject of this case, the Court must not lose sight of the importance of general deterrence. The reality is that many financial services licensees are, like Macquarie, large and profitable corporations. If the Court imposes penalties for contraventions of s 912A(1)(a) of the Corporations Act, or similar provisions, which are likely to be seen by financial services licensees generally as being modest or insignificant, they will have little effect in deterring others from engaging in similar conduct.
86 Seventh, while it is necessary to have some regard to the very large maximum penalty for Macquarie's contravention, the maximum penalty is only one of many relevant considerations. In this case, it is of quite limited relevance. A penalty approaching the maximum penalty in this case would only be appropriate if the circumstances of Macquarie's contravening conduct, and the circumstances pertaining to Macquarie itself, suggested that the strongest possible deterrence was warranted. I do not consider that the circumstances of this case are such that anything like the strongest possible deterrence is warranted.
87 Eighth, it is relevant, and of some significance, that ASIC has agreed that $10,000,000 is an appropriate penalty in all the circumstances. As a specialist regulator, ASIC may be taken to have some insight and expertise in assessing the level of penalty that might appropriately secure deterrence, both specific and general, in the circumstances of the case: Agreed Penalties Case at [60]-[61]. That said, the joint submissions must be assessed on their merits, and the Court must be wary of the possibility that the agreed penalty may be the product of the regulator having been too pragmatic in reaching the settlement: Agreed Penalties Case at [61], [110]; Volkswagen Aktiengesellschaft v Australian Competition and Consumer Commission (2021) 284 FCR 24; [2021] FCAFC 49 at [129]. There is, however, nothing to suggest that ASIC took an overly pragmatic approach in this matter when it reached an agreement with Macquarie in respect of the size of the pecuniary penalty.
88 Ninth, the Court's attention has been drawn to the penalties that have been imposed in some other cases involving contraventions of s 912A(1)(a) of the Corporations Act, in particular: Australian Securities and Investments Commission v Westpac Banking Corporation (Omnibus) (2022) 407 ALR 1; [2022] FCA 515; Australian Securities and Investments Commission v Mercer Financial Advice (Australia) Pty Ltd [2023] FCA 1453; Australian Securities and Investments Commission v RI Advice Group Pty Ltd (2022) 160 ACSR 204; [2022] FCA 496. The parties correctly conceded, however, that those cases are of limited assistance when it comes to the fixing of the appropriate penalty in this case. It is consistency in the application of the relevant legal principles that is important, not consistency in numerical outcome: McDonald v Australian Building and Construction Commissioner (2011) 202 IR 467; [2011] FCAFC 29 at [23]-[25], referring to Hili v The Queen (2010) 242 CLR 520; [2010] HCA 45 at [48]. Each case must be considered having regard to its own unique facts and circumstances. The outcome in other cases is of even less assistance where the penalties imposed in them were agreed penalties. That is because the most that could be said in those circumstances is that the penalties imposed by the Court were within the range of penalties that the Court could reasonably impose in the circumstances of those cases.
89 Nevertheless, nothing in the previous cases involving the imposition of penalties for contraventions of s 912A(1)(a) of the Corporations Act would suggest that the agreed penalty in this case is outside the range of penalties that the Court could reasonably impose.
90 In all the circumstances, I accept that a pecuniary penalty of $10,000,000 is an appropriate penalty in the sense that it is likely to serve the objective of deterrence and cannot be said to be greater than is necessary to achieve that objective.