UPDATE 1-First BanCorp to pay $8.5 mln to settle SEC suit

(Adds details from complaint, background, company comments)

NEW YORK, Aug 7 (Reuters) - First BanCorp (FBP.N) settled U.S. Securities and Exchange Commission charges that it aided and abetted fraud at the Doral Financial Corp (DRL.N),, for $8.5 million, an SEC lawyer said on Tuesday.

First BanCorp, a Puerto Rico lender that has struggled with accounting problems, also agreed to a permanent injunction, SEC's lawyer Cheryl Scarboro said.

First BanCorp said in a statement that it settled without admitting or denying wrongdoing.

The penalty will have no impact on its earnings in 2007, it said. It set aside $8.5 million in 2005 for the settlement with the SEC.

The SEC's lawsuit said former senior management of the bank holding company concealed the "true nature" of more than $4 billion worth of mortgage-related transactions from its auditor and investors between 2000 and 2005, according to papers filed with the U.S. District Court in Manhattan.

Doral Financial, which sold the mortgages to First BanCorp, "improperly recognized income on these transactions during the relevant period," the complaint alleges.

Doral was Puerto Rico's largest mortgage lender before accounting problems forced it to restate 2000-to-2004 results. The SEC fined Doral $25 million in September for overstating pretax earnings by $921 million for that period.

First BanCorp, headquartered in San Juan, in September, also restated results for the same five-year period. On Monday, it said a court had preliminarily approved settlement of a shareholder class-action lawsuit against it for $74.25 million.

First BanCorp's shares were up 9 cents at $9.02 during afternoon trading on the New York Stock Exchange.

(Reporting by Paritosh Bansal)

((Editing by Brian Moss, Tim Dobbyn, Leslie Gevirtz; paritosh.bansal@reuters.com; +1 212 393 9461)) Keywords: FIRSTBANCORP SEC/

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