Bank of America's (NYSE:BAC) investment banking arm, Merrill Lynch, is paying a fine to the Securities and Exchange Commission (SEC) over mutual fund advisory fees. The move comes after Merrill "self-reported" that it failed to disclose a conflict of interest in selling certain funds to its clients; effectively it steered those clients to higher-cost funds.

This reporting was part of an SEC program, which, in the regulator's words, "provided advisors an opportunity to self-report that they had failed to fully and fairly disclose their conflicts of interests in selecting for their advisory clients more expensive mutual fund share classes that paid 12b-1 fees when lower-cost share classes were available for the clients and be eligible for standard settlement terms that did not include the imposition of a civil penalty."

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12b-1 fees are charges for marketing and distribution costs that fund managers pass on to investors; they are frequently used as commissions to brokers. The name refers to the section of the Investment Company Act that governs such charges.

The SEC's self-reporting program began in February 2018 and has ended; Merrill's, plus that of two other advisors, are its final cases. The regulator said the program returned more than $139 million to affected investors.

Merrill's settlement terms are relatively modest. For its violation, the Bank of America unit will hand back over $425,000 -- a tiny sum when matched against the big bank's assets -- to affected investors. The SEC will also censure Merrill, which has been ordered to cease and desist from similar violations in the future.