CHARLOTTE, N.C. — Bank of America Corp. will establish a restitution fund for shareholders of its Nations Fund who lost millions of dollars because of alleged improper trading that gave a hedge fund advantage over other investors.

"Nothing is more important in our business than the trust and confidence of our customers and clients," chairman and chief executive officer Ken Lewis said in announcing the fund Tuesday.

Bank of America had said last month it would repay members of its Nations Fund if an analysis finds investors suffered a loss from alleged late trading with Canary Capital Management LLC.

On Tuesday, the company also said it would extend its restitution offer to shareholders of third-party mutual funds who were harmed if Canary, its affiliates, or others fail to make them whole.

Bank of America had an agreement with Canary to record late trades at 4 p.m. prices, allowing the hedge fund to cash in on after-hours news ahead of other investors, who at that hour would be forced to chance buying at the next day's closing price. Bank of America fired three employees; one has been charged criminally.

The Charlotte-based bank is the third investment firm to pledge to make restitution in a widening mutual fund scandal.

Last month, Canary and its managers agreed to pay $30 million in restitution for profits generated from improper trading, plus a $10 million penalty to settle allegations lodged by New York Attorney General Eliot Spitzer.

Janus Capital Group said earlier this month it would return about $1 million in fees it made from short-term trading. Canary's settlement neither admitted nor denied wrongdoing.

Spitzer said Canary engaged in illegal trading practices with mutual funds operated by Bank of America, Janus, Bank One Corp. and Strong Financial Corp. None of those funds have been charged.

Also Tuesday, Fidelity Investments and Franklin Resources Inc., two of the nation's biggest mutual fund concerns, confirmed they were among the latest to receive subpoenas from Spitzer's office.

Boston-based Fidelity and Franklin Resources, based in San Mateo, Calif., said they received the requests for information late last week. Both companies said they are cooperating with the investigation as well as similar requests from the Securities and Exchange Commission.

"The request for information was regarding market timing and late trading. Those are the same targets for which (Spitzer) is seeking information from several other firms," said Fidelity spokeswoman Anne Crowley. "We understand it to be part of a broader look at market timing and late trading."

Franklin Resources, which operates the Franklin Templeton mutual funds, said in a statement that the inquiry "in no way implies any wrongdoing by Franklin Resources."

Spitzer's complaint said Bank of America had the most extensive trading relationship with Canary, providing special treatment in exchange for big-money business from the hedge fund's owner, Edward J. Stern, an heir to the Hartz pet supplies fortune.

Spitzer charged a former Bank of America broker, Theodore Sihpol III, with larceny and securities law violations. Two other BofA employees have been fired.

Separately, Massachusetts Secretary of State William F. Galvin has launched investigations of financial services firms including Prudential Securities and Putnam Investments.