The Salomon Brothers Fund settled with shareholders who were opposed to Citigroup's $3.7 billion swap with Legg Mason by transforming into a traditional mutual fund from a closed-end fund, Dow Jones reports.

The Salomon Brothers Fund was involved in a proxy dispute with hedge funds Elliot Associates L.P. and Elliot International L.P., which were fighting it on the closed-end issue in order to reduce its discount to its net asset value, and in so doing, the hedge funds said they would not approve the merger of the two companies. But now that the fund is going to convert to a traditional mutual fund, the hedge funds have decided to drop the proxy issue and give a go ahead to the Legg Mason deal.

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