Bank of America agrees to pay fines

It is the biggest pay-out yet won by regulators tracking down wrongdoing by US mutual funds, in which at least half of US households have savings.

Bank of America and FleetBoston agreed to pay fines and cut their fees, but admitted no wrongdoing.

The US market regulator and New York’s attorney general unveiled the deal.

Other financial institutions that have settled with the SEC include Alliance Capital for $250m; Morgan Stanley for $50m; and Putnam Investments, the fifth biggest US mutual fund.

Bank of America and FleetBoston are planning a $47bn merger. The settlement clears away an embarrassment ahead of shareholder meetings on Wednesday to clinch their union.

They agreed to pay a combined total of $515m in fines, and to cut fees by $160m over five years.

Eight directors of Bank of America’s Nations Funds are to step down from its board within a year for ignoring improper trading by a client, Canary Capital Partners.

At least 30 people had already lost their jobs on Wall Street as part of the crackdown in the mutual fund industry before these departures.