March 24 (UPI) -- Bank of America Merrill Lynch has agreed to pay a record $42 million fine to the state of New York for fraudulent activity related to its electronic trading services.

New York Attorney General Eric Schneiderman announced the settlement Friday. An investigation of BoAML's electronic trading services revealed a fraudulent "masking" scheme, designed to mislead clients about entity responsible for executing in-house orders, the state said.

Though BoAML told its customers it was executing trade orders themselves, they were in reality routing them to electronic liquidity providers, including Citadel, Two Sigma and Knight. The bank used masking codes to make the trades.

"Bank of America Merrill Lynch went to astonishing lengths to defraud its own institutional clients about who was seeing and filling their orders, who was trading in its dark pool, and the capabilities of its electronic trading services," Schneiderman said in a statement.

The investigation showed BoAML began the masking scheme as early as 2008 and that at least 16 million client orders were affected.

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