Bank of America agreed on Tuesday to pay $315 million to settle claims involving mortgage securities issued by Merrill Lynch.

Investors, including the Public Employees' Retirement System of Mississippi pension fund, said Merrill Lynch misled them about $16.5 billion in securities, which went bad during the financial crisis.

Bernstein Litowitz Berger & Grossman LLP, attorneys for the plaintiffs, stated that false and misleading offering documents failed to disclose that loan originators had systematically ignored their stated underwriting and appraisal standards. 

The securities were issued between 2006 and 2007, when Merrill was an independent company.

The two sides reached an agreement in November, but terms weren't confirmed at the time. Under the agreement, Bank of America would not admit wrongdoing.

U.S. District Judge Jed Rakoff still has to approve the deal. Last week, Rakoff rejected a $285 million settlement between the U.S. Securities and Exchange Commission and Citigroup Inc. involving mortgage securities, citing in part the lack of admission of guilt. Rakoff's decision remains to be seen, but the Bank of America settlement does not involve the federal government, which may give it a better chance of being approved.

Bank of America also purchased Countrywide, the largest subprime lender, and is involved in litigation involving the company's mortgage debt.