By Amy Baldwin
The Associated Press

NEW YORK - When Wall Street's biggest brokerage firms settled charges this week that they issued biased research, their stocks suddenly became higher risks.

Analysts say investors are concerned that the brokerages, which include Merrill Lynch and Goldman Sachs, will face a possible deluge of investor lawsuits at the same time they're being forced to change the way they do business - both of which could hurt their profits.

"If investors take massive action, that is going to have a severe negative impact on stock prices" of the brokerage firms, said Martin D. Weiss, chairman of Weiss Ratings, Inc., a Palm Beach Gardens, Fla., firm that evaluates creditworthiness.

Weiss Ratings has already lowered the credit ratings of some of the brokerages to take into account their potential legal liabilities.

The $1.4 billion industrywide settlement called for one of the largest penalties ever levied by securities regulators. It also made public evidence of how securities firms misled or took advantage of investors during the 1990s bull market.

Lawyers are already sifting through evidence showing that some analysts hyped stocks or issued overly upbeat reports on companies so their firms' investment banking arms could score lucrative deals from those companies.