NEW YORK -- West Virginia has sued 10 investment banks over alleged conflicts of interest among stock analysts, saying a proposed settlement between the firms and state and federal securities regulators doesn't go far enough to punish wrongdoing on Wall Street.
The lawsuit, filed Monday in West Virginia state court, could seek as much as $1.9 billion from 10 major firms, said Fran Hughes, the state's chief deputy attorney general.
The charges parallel those alleged by state and federal investigators in their lengthy probes of stock analysts over the last two years. Those investigations were capped off in late April by a proposed settlement that would require the firms to pay $1.4 billion and implement a series of reforms.
The so-called global settlement is awaiting approval from a federal judge in New York. It also is being reviewed by regulators in all 50 states for their final signatures.
West Virginia filed suit because it was dissatisfied with the global settlement, Hughes said. The state is suing on behalf of residents who may have made investment decisions based on what it said could be biased research issued by the firms' analysts.
"We don't think the global settlement goes far enough in taking away the ill-gotten gains from people who deliberately violated the laws," she said. "We believe the fines were too light."
West Virginia would receive slightly less than $4 million under the global settlement, said Christine Bruenn, who heads a group of state securities regulators.
West Virginia would sign the global settlement if it were amended to allow the state to proceed with its suit, but would otherwise consider dropping out of the deal, Hughes said.
West Virginia's exit would not imperil the overall accord because the deal does not require every state to agree to it, Bruenn said.
"I'm disappointed that they've filed this lawsuit and I'm not really sure what they have in mind," Bruenn said.
The other states have said they will remain in the global settlement, Bruenn said.
Securities firms declined to comment Tuesday on the West Virginia suit.
Reuters was used in compiling this report.