American Funds, the top company in sales among all U.S. mutual funds over the past 18 months, is quietly talking to a California regulator about the practice of shelf space payouts to broker/dealers to recommend certain funds to investors, Dow Jones reports.

Other fund firms are also being investigated by the regulator, state Attorney General Bill Lockyer, American has not even come close to admitting the arrangements, and even if it were to be formally charged, Morningstar Analyst Kunal Kapoor said the firm will not go down quietly.

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