Jan 13 (Reuters) - 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.

The payment includes disgorgement, prejudgment interest and

a civil penalty, the SEC said. BMO did not admit or deny

wrongdoing in agreeing to settle.

(Reporting by Jonathan Stempel in New York)