Lately, ASIC announced civil penalty proceedings against a securities broker, alleging a failure to adequately disclose and report on short sell transactions. Misreporting or improper disclosures in contravention of regulations can distort market pricing and erode investor confidence.  Incidents of this nature typically arise from gaps within an organisation’s internal control and reporting framework. It also highlights that real-world consequences will apply especially in cases where a regulator determines breaches are systemic.

All these cases serve as a cautionary tale. Financial institutions operate in a trust-based environment. When disclosure obligations are neglected, it not only undermines individual investor confidence but also threatens broader market stability. Proper compliance reporting ensures that financial activities are conducted transparently and within the boundaries of the law. It enables regulators to detect misconduct early, prevent systemic risk, and enforce accountability.

Another critical area of regulatory disclosure is substantial shareholding reporting, where the process of short sell disclosures are completed together as they are very much related. These obligations require investors to disclose when their interest in a listed entity exceeds certain regulatory thresholds, promoting market transparency and preventing stealth takeovers or market manipulation. Failures to meet these disclosure requirements—whether deliberate or due to weak governance—can mislead markets about control and influence, distorting decision-making for other investors.

According to the latest analysis by Artius Global regarding financial sanctions issued in respect of shareholding disclosures, the total number of sanctions have doubled, the aggregate dollar value of fines increased 163% to over US$500 million, with Australia in the top 10 jurisdictions for the most violations.

As regulators continue to tighten oversight and raise expectations around governance, institutions must view compliance not as a box-ticking exercise, but as a strategic pillar of their investment data operations. This particular securities broker case—and others involving lapses in shareholding disclosures—remind us that transgressions in this space carry not just reputational costs, but tangible financial penalties and long-term damage to market trust and confidence.  The availability of new tech-led solutions which readily integrate with existing technology and data architecture, means that the costs of not complying heavily outweigh the cost of an auditable and automated compliance frameworks every time.

In a climate of increasing scrutiny, strong compliance and disclosure practices are not optional—they are imperative. Why compromise integrity and court unnecessary risk? Don’t leave your organisation open to vulnerabilities for short-term convenience.