Franklin Resources, manager of the Franklin and Templeton mutual funds, will likely settle fraud charges this week for awarding kickbacks to brokers who sold its proprietary funds, according to California Attorney General Bill Lockyer, Reuters reports.

The San-Mateo, Calif.-based company is expected to pay the state about $18 million in fines and disgorgement, Lockyer said. "We are very close to resolution," Lockyer said during a speech. "I think it [will be] next week."

Lockyer told reporters that his office may announce a joint settlement with the Securities and Exchange Commission but did not provide any details as to how much Franklin may have to pay federal regulators. Franklin declined comment on the pending settlement.

Directed brokerage has been a longstanding practice in the mutual fund industry, one that enables fund companies to gain more visibility by paying brokers to steer clients into their funds. In August, the SEC officially barred mutual fund companies from funneling stock trades to brokerage firms that agree to promote the mutual funds to investors.

Last week, Putnam Investments settled similar charges brought by the SEC for $40 million. In September, PIMCO paid $20.6 million to settle similar pay-to-play charges with state and federal regulators.

Even after Franklin settles the directed-brokerage charges, it’s not out of the woods. The company still faces legal troubles in Massachusetts after state regulators charged the company with fraud for failing to admit any wrongdoing in its market-timing settlement.

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