Bank of America and its former chief executive, Kenneth Lewis, have agreed to pay $25 million to settle the last major lawsuit alleging they misled investors about Merrill Lynch & Co's financial condition during the height of the 2008 financial crisis.

The second-largest US lender by assets will pay New York state $15 million and improve board oversight as part of a deal with New York Attorney General Eric Schneiderman. The payment ends a lawsuit alleging the bank duped shareholders by failing to disclose mounting losses at Merrill before the acquisition closed or that the deal allowed Merrill to award billions of dollars in bonuses to its officials.