Wall Street fines could reach $2bn

Speculation that investment banks on Wall Street could be forced to pay a combined fine of up to $2bn (£1.3bn) to settle conflict of interest charges was yesterday described as not "out of bounds" by the chairman of the New York stock exchange.

Financial regulators and state officials are attempting to broker a sweeping settlement of the various allegations that have been made against the banks. A resolution is expected as early as next week.

Firms including Merrill Lynch, Citigroup and Credit Suisse First Boston have been accused of misleading investors with biased research designed to keep clients happy and win investment banking business.

Richard Grasso, the NYSE chairman, said the fines were meant as a penalty for wrongdoing and not as restitution for investors who have lost trillions of dollars since the technology crash.

Reports have suggested the banks will have to pay sanctions of between $500m and $2bn.

Mr Grasso said the two sides were finalising details of the settlement, possibly agreeing structural changes in the banks. "It is important that we get that settled quickly," he said.

Eliot Spitzer, the New York state attorney general, has proposed that the banks fund independent research operations alongside their own in-house analysts.

Mr Grasso said the stock exchange should share part of the blame for the late 1990s bubble. "There is a lot of blame to go around and we certainly should share a part of it." But he added: "It's easy to look back with what we know now and be critical. We were in a period where, no matter what one said, higher highs were being made every day."