WASHINGTON, Jan 13 (Reuters) - BMO Capital Markets

agreed to pay more than $40 million to settle U.S. Securities

and Exchange Commission charges that broker-dealer failed to

supervise its agency bond desk, the SEC said on Monday.

The U.S. regulator said it charged BMO Capital for failing

to supervise employees who sold mortgage-backed bonds "using

offering sheets and bond metrics that were misleading and did

not accurately describe the characteristics of the collateral

backing the bonds."

BMO Capital, without admitting or denying the charges,

agreed to an order requiring it to pay $19.4 million in

disgorgement, $2.2 million in pre-judgment interest, and a $19

million civil penalty, the SEC said in a statement.