A broker-dealer subsidiary of Toronto-based BMO Financial Group will pay nearly $41 million in penalties to the Securities and Exchange Commission (SEC) to settle allegations that its traders issued misleading disclosures on bonds for three years, causing $19 million in harm to its customers.
New York-based BMO Capital Markets Corp. failed to properly supervise the trading activity of its bond desk, according to the SEC. From 2020-23, BMO Capital traders issued misleading information on the characteristics of mortgage-backed bonds, as well as the collateral backing those bonds, the agency said in a press release Monday. These types of bonds are called collateralized mortgage obligation (CMO) bonds.
