BMO Capital Markets agreed to pay more than $40 million to settle U.S. Securities and Exchange Commission charges it failed to properly supervise employees who sold mortgage-backed bonds, the regulator said on Monday.

Canadian bank's capital markets arm reportedly failed to detect representatives' misleading disclosures involving $3 billion of mortgage-backed "sliver bonds" sold over a multi-year period.

The U.S. Securities and Exchange Commission says BMO has agreed to pay more than US$40 million to settle charges related to the bank's alleged supervision failure in bond selling.

A unit of Bank of Montreal agreed to pay $40.7 million to settle U.S. Securities and Exchange Commission charges that it failed to supervise employees who misled investors about the attractiveness of mortgage-backed bonds the bank was selling.