FleetBoston said on Thursday that two of its subsidiaries received a Wells notice from the SEC, indicating the agency’s regional Boston office had recommendation enforcement action against the firm for shirking its fiduciary duties.

Subsidiaries, Columbia Management Advisors and Columbia Funds Distributor, are accused of not revealing certain fund share trading activity arrangements in their prospectuses, the firm said.

While reporting its fourth quarter financial results, the firm said that it believes the allegations relate to a "limited number" of trading agreements that played out between 1998 and 2003. "The majority of trades made pursuant to these arrangements were made by three entities and occurred in one international and two domestic funds. None of these arrangements exist today."

The development is unlikely to affect the firm’s intended merger with Bank of America, announced in late October. At the time of the deal, there was speculation that BofA’s troubled Nations Funds would benefit from being merged and rebranded into the Columbia family, which has an extremely strong presence in the Northeast.

Industry watchers still think that is a viable option for the firm. Russ Kinnel, director of fund analysis for Morningstar doesn’t see the recent announcement changing BofA’s plans since the Nations brand is already tainted.

"There is consideration now that the Nations Funds be branded away," said Jeff Keil, vice president of Lipper’s Global Fiduciary Review. "I think the Columbia brand is still pretty strong," Keil said. "This news shouldn’t dilute the Columbia name at all, but it depends on how egregious the activities were."

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