(Bloomberg) -- Bank of America’s Merrill Lynch agreed to pay about $131 million to settle U.S. regulatory claims it failed to tell investors that hedge fund Magnetar Capital had a role in selecting assets for two 2006 mortgage-backed securities.

Magnetar, which held both equity and short positions in the collateralized debt obligations known as Octans I CDO and Norma CDO I, exercised significant influence over the selection of collateral for the investments, the SEC said today in a statement.

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