Bank of America Corp. may pay at least $250 million to settle charges that it allowed favored clients to trade mutual funds at the expense of ordinary investors, a person familiar with the matter said on Thursday.
The No. 3 U.S. bank would join Alliance Capital Management LP, MFS Investment Management and others in settling with regulators probing abuses in the $7 trillion mutual fund industry.
New York Attorney General Eliot Spitzer launched the regulatory probes last September. He accused Bank of America of helping the Canary Capital Partners LLC hedge fund illegally trade the bank's Nations funds. Canary settled with Spitzer for $40 million without admitting or denying wrongdoing.
Like Alliance, Charlotte, North Carolina-based Bank of America may also agree to reduce fund fees, the person familiar with the matter said. A settlement may be reached later this month but is not imminent, people familiar with the matter said.
Robert Stickler, a spokesman for Bank of America, declined to comment. Juanita Scarlett, a spokeswoman for Spitzer, and SEC spokesman Herb Perone also declined to comment.