WASHINGTON (AP) — Capital One Financial Corp. is paying $3.5 million to settle federal civil charges of underreporting as much as $123 million in losses on auto loans in the months preceding the financial crisis.

The Securities and Exchange Commission said Wednesday that Capital One understated its auto loan losses in financial reports for the second and third quarters of 2007, when they came in higher than the bank expected.

Capital One, based in McLean, Va., and best known for its heavily advertised credit cards, is the sixth-largest U. S. bank based on deposits. Most of the profits in its auto finance business came from loans to consumers with weak credit histories, the SEC said.

Two former Capital One executives agreed to pay a total $135,000 in fines to settle the SEC charges. The bank and the executives neither admitted nor denied wrongdoing.

"No consumers were affected, the SEC does not criticize the company's or the auto finance unit's reserves (for loan losses) as of 2007 year-end, and the settlement does not require a restatement of Capital One's financial results," the company said in a statement. "The settlement will not affect any current or future business activities by Capital One."

Capital One shares closed Wednesday trading at $57.06, up 72 cents for the session, but down about 1.5 percent since the start of the year. The stock has traded as low as $47.99 and as high as $62.92 in the past 52 weeks.

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