The American Funds mutual fund group has gone 77 years without a significant whack from financial regulators, a track record that is a true rarity in the investment business, the Los Angeles Times report.

Now the firm’s parent, Los Angeles money-management giant Capital Group Cos., has to decide whether to wave the white flag in a three-year legal battle, ending the company’s blemish-free streak.

American Funds is well known on Wall Street for its conservative investment style, low fund management fees, strong long-term returns — and for being unapologetically aggressive in protecting its franchise. It now has taken that hard-edged approach to extremes with one of its regulators, in a case that may finally be coming to a head.

The company has been accused of making improper payments to about 50 brokerages from 2001 through 2003 as an incentive to get them to pitch its funds to investors.

If a broker sold you shares in one of the company’s funds in that period — say, the popular Growth Fund of America — the broker’s firm might have gotten a little extra reward, beyond normal sales fees.

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