NEW YORK (TheStreet) -- The Securities and Exchange Commission on Wednesday announced that Fifth Third Bancorp (FITB) of Cincinnati and its former CFO Daniel Poston had settled charges of "improper accounting of commercial real estate loans in the midst of the financial crisis."
Fifth Third agreed to pay a $6.5 million fine, while Poston agreed to pay $100,000 and "be suspended from practicing as an accountant on behalf of any publicly traded company or other entity regulated by the SEC."
Poston had been demoted from the CFO position and named Fifth Third's "chief strategy and administrative officer in November, when Fifth Third announced its agreement to settle the charges.
The SEC accused the bank and Poston of failing to classify a pool of nonperforming commercial real estate loans as "held-for-sale" during the third quarter of 2008, even though the bank had already decided to sell the loans. Recategorizing the loans during the third quarter of 2008 would have included a significant write down, which would have "increased Fifth Third's pretax loss for the quarter by 132 percent."
The SEC said Poston during the third quarter of 2008 was "familiar with the company's loan sale efforts, which included entering into agreements with brokers during the third quarter of 2008 to market and sell loans." The regulatory added that "Despite understanding the relevant accounting rules, Poston failed to direct Fifth Third to classify and value the loans as required," and that the former CFO made inaccurate statements to auditors. Poston also made inaccurate statements to Fifth Third's auditors about the company's loan classifications, and certified the company's inaccurate results for the third quarter of 2008.
Neither Fifth Third nor Poston admitted any wrongdoing.
Fifth Third's shares were down slightly during the final hour of trading Wednesday, to $19.93.
FITB data by YCharts
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-- Written by Philip van Doorn in Jupiter, Fla.
>Contact by Email. Follow @PhilipvanDoorn
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