Justice Denied.(ISSUES & INSIGHTS)(EDITORIALS)(Editorial)

Litigation: Is anyone else uncomfortable with the $1.4 billion settlement Wall Street struck with regulators? The flood of litigation to come will show it settled little.

Wall Street leaders deserve plenty of blame for the fleecing of investors over the last few years, not least for pushing "analysts" to flog profitless firms while secretly shilling for investment bankers.

That said, we're troubled by the legal actions that followed and see serious flaws with the legal apparatus that led Citigroup, Credit Suisse First Boston, Merrill Lynch, Morgan Stanley and others to agree to the settlement and alleged business reforms.

Just to recap, the brokers settled charges levied by state securities regulators and prosecutors and the SEC that they abused their customers during the stock market bubble of the '90s. They defrauded small investors to win lucrative business from corporate clients.

Of the $1.4 billion settlement, $387.5 million will be available to investors who file claims with the government. About $512 million will go to set up "independent" stock research, whatever that is, and the rest, another $500 million, will go into state coffers.

The problem with this picture: For starters, it's the shareholders of these companies who will bear the $1.4 billion cost even though they had nothing to do with the alleged crimes.

We understand the notion of deep pockets and realize only the companies have the riches to make whole the legions of defrauded investors. But it's wrongheaded that the senior and midlevel leaders of these firms who condoned or even encouraged such unseemly behavior should get off scot-free.