UPDATE 1-TJX settles data breach case with U.S. states

* TJX to pay $9.75 million

* Settlement resolves probe involving 41 states

NEW YORK, June 23 (Reuters) - TJX Cos Inc (TJX.N: Quote, Profile, Research) said on Tuesday it reached a settlement with 41 states resolving an investigation of a data breach in its computer system, which the off-price retailer revealed in 2007.

Under the settlement, TJX will pay $9.75 million, including $2.5 million to set up a new Data Security Fund to be used by the states. It will also certify that its computer systems meet data security conditions specified by the states, TJX said.

The company said the cost of the settlement was reflected in a reserve it set aside in 2007, totaling $107 million, for potential losses.

The retailer, which operates more than 2,600 stores under names such as TJ Maxx, Marshalls and A.J. Wright, disclosed in 2007 that data from millions of credit and debit cards had been stolen from its computers by hackers over a period of 18 months.

Personal information from 451,000 customers who returned goods to its stores was also stolen, TJX said. (Reporting by Aarthi Sivaraman; editing by John Wallace)