Bank of America Corp. and FleetBoston Financial Corp. yesterday struck an unusual joint deal with securities regulators that will cost the banks $675 million to settle charges that they had defrauded shareholders by allowing select investors to improperly trade in their mutual funds.

Regulators are also forcing out eight trustees of Bank of America’s Nations Funds. The expulsion is the first time regulators have held mutual fund trustees, who are akin to directors of a corporate board, accountable for allowing improper behavior.

Coming on the eve of the two institutions’ merger, the timing of the deal was so crucial that attorneys negotiated all weekend to reach a “preliminary” agreement that they could announce yesterday. The banks are scheduled to hold separate shareholder meetings tomorrow for votes on the takeover.

“It was very desirable to have the agreement in place so the shareholders could see it before the final vote,” said Bank of America spokesman Robert L. Stickler. Bank of America chief executive Kenneth D. Lewis said in a statement that the two banks “now look forward to focusing our energies on growing our business.”

The deal represents the largest penalties regulators have secured so far in the mutual fund industry scandal. The payments are also much greater than what either bank had initially suggested or expected it would pay. Regulators said the payments reflect the fact that the scope of market timing at Fleet’s Columbia Funds was significantly more extensive than first thought, while the wrongdoing at Bank of America involved multiple levels of the company and was so egregious as to warrant a stiffer punishment than they had levied in previous cases.

The coordinated settlements of what had been two separate fraud investigations is unprecedented in the market-timing scandal, and was driven by the desire of the two banks to put the issue to rest before the scheduled April 2 closing of Bank of America’s acquisition of Fleet. Regulators took the unusual step of disclosing a “preliminary” agreement with both institutions now, rather than wait until a final deal, which will include more detailed information about the cases.

With this agreement, mutual fund firms have now reached settlements totaling $1.65 billion, eclipsing the $1.4 billion Wall Street firms agreed to pay last year to settle charges their analysts issued biased research to win investment banking business, New York Attorney General Eliot Spitzer said.

Under its settlement with the Securities and Exchange Commission and Spitzer, Fleet agreed to pay a total of $140 million. Half will go to restitution for shareholders of the funds that were market-timed, and the other half reflects penalties.

This is far more than the $25 million in restitution that Fleet said several weeks ago that it expected to pay. At the time, Fleet acknowledged it had agreements with investors to market-time its funds, but said most of the trading involved just three investors and three mutual funds.