New York (CNN) - Federal and state regulators are close to reaching a settlement with Bank of America, one of the companies named in NY Attorney General Eliot Spitzer's investigation into mutual fund trading practices, a source close to the situation told CNNfn.

This person said Spitzer's office and the SEC have been engaged in settlement talks with Bank of America, Janus Capital Group Inc. and Bank One Corp, all named in the attorney general's mutual fund investigation.

With talks still in the early stages, a settlement is at least "weeks away" and no penalties are on the negotiating table yet, according to people familiar with the process.

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Spitzer's original complaint says Bank of America allowed big institutional traders to engage in market timing and late trading in violation of the firm's prospectus, giving them an advantage over smaller players.

Eliot Spitzer's office declined comment and Bank of America would only say that the company was "cooperating fully with the authorities on the mutual funds issue."