SEC charges BMO US$40 million for selling ‘misleading’ mortgage-backed bonds

- Stock and Share Market News, Economy and Finance News, Sensex, Nifty, Global Market, NSE, BSE Live IPO News
- Analysis-2024 the ‘year of the bond’ as record inflows top $600 billion
- White & Case advises Rohlik.cz Finance II on innovative CZK 4 billion retail bond issuance
- Vanguard favours bonds over stocks in 60/40 portfolios
- US Bond Markets Brace For Volatile 2025
A regulator in the United States has charged a unit of the Bank of Montreal (BMO) more than US$40 million for selling mortgage-backed bonds that it says offered misleading metrics and did not accurately describe the characteristics of the collateral backing the bonds.
Bạn đang xem: SEC charges BMO US$40 million for selling ‘misleading’ mortgage-backed bonds
To settle the charges, BMO Capital Markets Corp. agreed to pay to settle the “disgorgement, prejudgment interest and a civil penalty,” the Securities and Exchange Commission (SEC) said in a statement on Monday.
“It is critical that firms have supervisory processes that are customized to their business units,” Sanjay Wadhwa, the agency’s acting director of the Division of Enforcement, said. “Had BMO appropriately tailored its supervision … it might have stopped its employees from continuing to use these misleading practices.”
BMO said it was “pleased to have this matter behind us,” that it held itself to the “highest standards of fair and ethical conduct” and it continuously reviews and enhances its controls and supervisory framework.
Xem thêm : Dogecoin’s Remarkable Surge: Large Transaction Volume Spikes 41% as Network Activity Intensifies
The SEC’s order said BMO representatives structured mixed collateral bonds backed by pools of residential mortgages, using a small sliver of higher-interest mortgages, in a way that caused third-party data provider systems to generate inaccurate information about the bonds’ overall composition.
The bank then sent “misleading metrics about the bonds to customers, even though its representatives should have known they were misleading,” the agency said.
Between December 2020 and May 2023, BMO sold $3-billion worth of these bonds. The SEC said BMO failed to “reasonably supervise its registered representatives” involved in the offer and sale of these bonds. It also said the bank did not have a process to review the type of information distributed about the bonds.
“Without admitting or denying the commission’s findings, BMO agreed to an order requiring it to pay US$19,417,908 in disgorgement, US$2,241,507 in pre-judgment interest and a US$19-million civil penalty,” the SEC said.
The SEC has established a fund to distribute the funds to affected investors.
Xem thêm : A Special Bond – Card Chronicle
The SEC’s order comes a month after BMO’s quarterly results didn’t meet analyst expectations. BMO’s net income for the three-month period ending Oct. 31 was $2.3 billion, which was higher than the $1.7 billion earned during the same period last year and resulted in net earnings per share of $2.94.
However, adjusted for certain conditions, BMO earned $1.5 billion compared to $2.2 billion a year ago, which resulted in adjusted earnings per share of $1.90. Analysts had expected BMO to earn $2.38 per share, according to a Bloomberg survey.
Nguồn: https://linegraph.boats
Danh mục: News