By Sebastien Malo

NEW YORK (Reuters) - The head of New York City's Dominican Day Parade was ousted from his post on Tuesday after an investigation found he mismanaged the finances and operation of the popular yearly procession, the state attorney general said.

Nelson Peña, who oversaw the parade for two decades, failed to keep proper records, had no functioning boards of directors and did not file annual financial reports required of nonprofits by law, Attorney General Eric Schneiderman said.

Started in 1982 as a small celebration, New York's Dominican Day Parade now draws more than a half-million revelers each August in what is believed to be the country's largest parade celebrating Dominican identity and culture.

Nearly half of the estimated 1,757,000 people of Dominican origin in the United States live in New York state, according to 2013 census statistics.

Along with leaving his post, Peña, 65, agreed to a three-year ban from leadership roles in the parade in a deal with city and state officials, Schneiderman's statement said.

He also agreed to the dissolution of the various not-for-profit entities he had used to operate and raise funds for the parade and withdrew his application to run the parade this year.

"Whatever nonprofit organization is responsible for its operation must be properly constituted, comply with New York law, and be accountable and transparent," Schneiderman said. "For years, Nelson Peña has run the parade without regard to these requirements."

No criminal charges or further investigations were planned by the attorney general's office, according to a spokesman.

Reached by telephone, Peña called the decision "unjust."

"There are no accusations in court," he said. "In the year 2018, I will return to the parade."

The parade draws local political leaders, candidates for local office and candidates for president of the Dominican Republic.

A new not-for-profit Dominican Day Inc will take the reins, the attorney general said.

(Editing by Ellen Wulfhorst and Peter Cooney)