“It is critical that firms have supervisory processes that are customized to their business units,” Wadhwa said. “Had BMO appropriately tailored its supervision of the Agency CMO desk’s marketing of new-issue mortgage-backed securities, it might have stopped its employees from continuing to use these misleading practices.”
Industry Implications
The settlement underscores the SEC’s commitment to ensuring that broker-dealers maintain robust compliance systems, particularly when dealing with complex financial products like mortgage-backed securities. By penalizing inadequate oversight, the SEC aims to reinforce the importance of accurate investor communications and prevent similar misconduct in the future.
BMO Capital Markets has neither admitted nor denied the SEC’s findings but has agreed to comply with the settlement terms.
