Pleased to have it behind us But is the view ahead as clear?
(Bloomberg) -- Bank of Montreal dismissed a managing director on its US mortgage-backed bond desk in connection with a regulatory probe into misleading marketing practices.
Doo Sik Lew was discharged last month, according to a disclosure BMO Capital Markets Corp. filed with the Financial Industry Regulatory Authority.
The US Securities and Exchange Commission previously said it was planning to file an enforcement action against Lew alleging “potential deceptive structuring and marketing practices” related to the sale of certain mortgage-backed securities.
Jeff Roman, a spokesperson with BMO, said the bank would not comment on personnel matters. Lew didn’t reply to a message seeking comment.
Lew, who has 18 years of industry experience and worked at BMO for six years, is cooperating with the investigation and contests the SEC’s allegations, according to the Finra filing. He was first approached by securities regulators in September 2023, the filing shows.
SEC Settlement
BMO recently agreed to pay more than $40 million to settle claims stemming from an SEC investigation into its mortgage-backed bonds desk.
The agency alleged that employees of the bank’s capital-markets business used misleading information to make mortgage-backed securities more marketable. It charged BMO Capital Markets with failing to supervise employees who engaged in the practice from December 2020 to May 2023.
The firm agreed to return $19.4 million in gains to those who were affected and pay a $19 million civil penalty along with $2.2 million in interest. The bank did not admit to or deny the allegations.
The SEC settlement did not name specific BMO employees and the Finra filing on Lew did not directly connect him to that investigation.
BMO’s Roman would not comment on the connection between the two matters.
“We hold ourselves to the highest standards of fair and ethical conduct, and continuously review and enhance our controls and supervisory framework,” Roman said by email on Friday, repeating a comment the bank provided on the original SEC settlement. “We’re pleased to have this matter behind us.”