Fifth Third Names CFO as SEC Seeks Ban on PredecessorElizabeth Dexheimer and Laura Marcinek
Fifth Third Bancorp said the U.S. is seeking to ban former interim finance chief Daniel T. Poston from practicing before securities regulators for one year after finding accounting irregularities tied to commercial loans.
The dispute concerns how Fifth Third, Ohio’s biggest bank, accounted for certain loans in 2008, the Cincinnati-based company said yesterday in a statement. Former Treasurer Tayfun Tuzun was appointed chief financial officer, effective Oct. 31, and Poston was named chief strategy and administrative officer, the lender said.
“This is obviously an agreement in principle that we hope to achieve closure to as soon as possible,” Larry Magnesen, a bank spokesman, said in a phone interview. Poston’s role change is “not a demotion” and he will continue reporting to Chief Executive Officer Kevin Kabat, Magnesen said.
Poston is in discussions that would require him, “without admitting or denying any factual allegations,” to agree to a cease-and-desist order, a civil money penalty, and a one-year ban from practicing before the SEC, according to the statement. Under such a ban, Poston would no longer represent the company in any interactions with the SEC.
Fifth Third, also without admitting or denying any factual allegations, would consent to a finding that the company didn’t properly account for a portion of its commercial real estate loan portfolio and pay a penalty. The amount, which wasn’t specified, would be covered by reserves, the lender said.
Magnesen said Poston had no comment, and Poston didn’t respond to an e-mailed request for an interview. John Nester, an SEC spokesman, declined to comment.
The SEC, which began its probe about three years ago, has been investigating whether some of Fifth Third’s loans should have been designated as held-for-sale in the third quarter of 2008, at the height of the financial crisis, instead of the fourth quarter of that year, the company said. Reclassifying loans as held-for-sale instead of held-to-maturity means the assets have to be marked to market.
In August, Fifth Third restated second-quarter results, saying earnings were $12 million less than previously reported as it added to a reserve for litigation costs. The company sees no need to restate 2008 results, Magnesen said.
Fifth Third climbed 1.6 percent to $19.14 yesterday in New York and has advanced 26 percent this year, outpacing the 25 percent gain for the KBW Bank Index of 24 U.S. lenders.