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Fifth Third Bank|Fined $6.5 Million

WASHINGTON (CN) - Fifth Third Bank will pay $6.5 million to settle charges of improper accounting and its former CFO will pay $100,000 and accept a 1-year suspension, the SEC said.

As the real estate crisis whacked the bank's loan portfolio in 2008, and borrowers missed payments, the Cincinnati-based bank decided to sell "large pools of these troubled loans," the SEC said in a statement announcing the settlement.

The pools totaled $1.5 billion, the SEC said in its cease-and-desist order.

Accounting rules required the bank to classify the loans as "held for sale" and assign them a fair value. To do so would have increased Fifth Third's pretax loss for the third quarter of 2008 by 132 percent. But the bank classified the loans as "held for investment," disguising the fact that it had decided to sell them, the SEC said.

That misled investors, and Poston knew it, but did not tell the bank to do otherwise, according to the SEC's cease-and-desist order.

Poston cannot practice as an accountant before the SEC for a year.

Fifth Third Bank has $121 billion in assets. It is the 22nd largest bank holding company in the country. Its stock trades on the NASDAQ.

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