The Press Council has considered a complaint by Macquarie Group Ltd (“Macquarie”) about articles published in the print and online editions of The Sydney Morning Herald from 1-5 August 2014.
The two articles of principal concern appeared in print on 2 August. One was headed “Financial planning: Existence of ‘Penske File’ revealed. Macquarie supplied cheat sheet to advisers” (published online on 1 August headed “Macquarie advisers cheated on competency test and exposed clients”). The second was headed “Down the hole: The silver doughnut that left a big hole” (published online on 2 August headed “Macquarie Private Wealth: The silver doughnut that left a big hole in investors’ nest eggs”).
Allegations of cheating
Macquarie complained that the headline of the first article inaccurately and unfairly implied that the corporation’s subsidiary, Macquarie Private Wealth (“MPW”), had assisted its financial advisers to cheat in compulsory competency examinations by giving them a “cheat sheet” of answers which the publication dubbed “the Penske file”.
Macquarie also complained that it had not been given a fair opportunity to comment before publication on the allegation that conduct was of the corporation itself (rather than only action by some staff), and that its subsequent responses were not adequately reported. It pointed out that the publication asked whether it knew the relevant material had been “circulated” amongst its advisers and, if so by whom, but did not ask whether management had been involved in doing so. It said it was given only 24 hours to respond to these and many other specific questions on the matter.
The publication responded that neither the headline nor the text of the first article suggested Macquarie had officially authorised cheating by the MPW advisers. But the publication said it knew from reliable sources that the cheating had been well-known at very senior levels.
It said Macquarie had been asked some detailed questions in writing relating to one of the matters in the weeks before the first article appeared, and further detailed written questions were sent approximately 36 hours before, but in both instances Macquarie did not provide any specific replies despite a follow-up call by the publication. It said the only points of substance in Macquarie’s response had been reported in the first article. It also said further written questions had been sent after the first article appeared but again no substantive response was provided.
Allegations of misclassification
Macquarie complained that the second article inaccurately and unfairly implied it had deliberately misclassified some clients as sophisticated investors. It focused particularly on the statement: “A Fairfax Media Investigation can reveal that [a named client is] one of hundreds – possibly thousands – of customers of Macquarie who may have been deliberately misclassified as sophisticated or wholesale investors rather than retail investors to avoid paperwork and the extra regulatory requirements attached to retail clients”. It said the only example the publication gave for this allegation had not been misclassified, and had always been treated by it as a retail client.
Macquarie also complained that it had not been given a fair opportunity to respond beforehand to the proposed allegations, especially that it had deliberately misclassified clients to avoid regulatory requirements, or to respond to the case of the named client on which the article focused heavily as an example of the alleged conduct and consequences. It said that had the case of the named client been put to Macquarie, it would have given a detailed response about it. It complained that it had been given only 24 hours to respond to many detailed questions on the matter and that its subsequent response had not been adequately reported by the publication..
The publication responded that several reliable sources, including the named client and the wording of mass MPW mail-outs to clients, supported the second article’s allegations of misclassifications. It said the article stated only that deliberate misclassification “may” have occurred, not that it definitely did occur.
It said that no specific responses had been given to the detailed questions sent to Macquarie, and that if requested it would have given Macquarie more time to answer. It said the case of the named client had not been raised beforehand with Macquarie because the client had been very hesitant about having his affairs and identity published, and it feared that if Macquarie was given advance notice he might be persuaded to withdraw his permission.
The Council’s Standards of Practice require reasonable steps to ensure factual material is accurate, not misleading, and reasonably fair and balanced; and to publish corrections or take other adequate remedial action in response to any significant inaccuracies. They also require reasonable steps to ensure that opinions are readily distinguishable from facts, and that people adversely referred to in an article are given a fair opportunity for publication of a reply.
The Council considers that the headline in the first article implied that assistance to cheat had been provided with high-level corporate approval. The text, however, referred only to “a document circulated by management” and did not provide evidence to support this or the allegation implicit in the headline. While the Council is not in a position to determine whether management circulated such a document, the complaint about the headline is upheld for failure to take reasonable steps to ensure fairness.
The Council considers that Macquarie was given a fair opportunity to provide relevant information and comment on the issue of whether a document was circulated and that its responses were adequately reported. In coming to this conclusion, the Council took account of the fact that, being a large and sophisticated corporation, Macquarie was given sufficient notice to respond or to negotiate in good faith for extra time to do so. Accordingly, the complaint on that ground is not upheld.
The Council considers the second article’s conjecture that misclassifications might have been deliberate, and about the motives for doing so, was serious enough that Macquarie needed to be given specific notice and a fair opportunity for its response to be included in the article. The failure to do so was unreasonable, even after taking account of Macquarie’s apparent reluctance to respond to specific questions. Accordingly, that aspect of the complaint is upheld for failure to ensure reasonable fairness.
In view of the prominence and emphasis given to the experiences of the named client, there was a strong case for Macquarie being given a prior opportunity to comment on his case. On the other hand, the client’s hesitancy about revealing his identity, and the company’s generally uncooperative response to the publication’s investigations, lead the Council to conclude, on balance, that the complaint on that ground should not be upheld. In many other circumstances, however, a prominent case study of this kind should be disclosed in time for comment before publication.
The Council considers that Macquarie’s responses to the second article were reasonably reported. Accordingly, the complaint on that ground is not upheld.
Note (not required for publication):
The Council also considered the following articles, but found they did not raise any grounds for upholding a complaint: “The questions Macquarie won’t answer”, (online 4 August 2014); “Class-action lawyers loom over Macquarie”, “Lawyers sniff money in the making over Macquarie advice” (pp 21 and 28, 4 August 2014); and “Doubts over Macquarie Private Wealth compensation”, (p 12, 5 August 2014).
Relevant Council Standards (not required for publication):
This adjudication applies the following General Principles of the Council:
“Publications must take reasonable steps to:
1. Ensure that factual material in news reports and elsewhere is accurate and not misleading, and is distinguishable from other material such as opinion”.
2. Provide a correction or other adequate remedial action if published material is significantly inaccurate or misleading”.
3. Ensure that factual material is presented with reasonable fairness and balance, and that writers’ expressions of opinion are not based on significantly inaccurate factual material or omission of key facts”.
4. Ensure that where material refers adversely to a person, a fair opportunity is given for subsequent publication of a reply if that is reasonably necessary to address a possible breach of General Principle 3.”