Washington ? Senators voiced skepticism Wednesday that the government’s $1.4 billion settlement with 10 major investment firms will fundamentally change Wall Street’s culture, saying that top executives need to be held accountable.

“I believe that the Wall Street culture must change from the top down, and I am not convinced that the (settlement) has done enough to change attitudes at the top” of the big investment firms, Sen. Richard Shelby, R-Ala., chairman of the Senate Banking Committee, said at a hearing called to examine the accord. “Without holding executives and CEOs personally accountable for the wrongdoing that occurred under their watch, I do not believe that Wall Street will change its ways or that investor confidence will be restored.”

William Donaldson, chairman of the Securities and Exchange Commission, held open the possibility of future enforcement action against executives of Wall Street firms.

“Ongoing actions by the SEC will be directed toward supervisory” responsibilities of brokerage executives, Donaldson testified at the hearing.

The SEC and state regulators have exposed Wall Street’s culture in an investigation that found analysts misled investors with stock picks designed to win the firms investment-banking business from the companies issuing the stock.

Dozens of e-mail excerpts made public last week, included in lawsuits filed against the firms by the SEC, portray an industrywide pattern of abuse, financial incentives and pressures that sometimes led analysts to publish falsely rosy stock reports.

Shelby suggested that the amount of fines being paid by Wall Street’s biggest firms was “relatively small.”

Donaldson disputed that, noting that the penalties were records for the SEC. They also represent an intangible cost for the firms’ reputations he said, and “there is considerable civil liability out there” that enables investors who believe they were defrauded to privately sue the firms to recover money.

Still, Donaldson acknowledged: “Unfortunately the losses that investors suffered in the aftermath of the market bubble that burst far exceed the ability to compensate them fully. They can never fully be repaid.”

Seeking to restore investor confidence, the SEC and state and market regulators are forcing the firms to cut the ties between analysts’ research and investment banking, pay a total of $432.5 million for independent stock research for their customers, and fund an $80 million investor education program.

A fund of $387.5 million will be set up to compensate customers of the 10 firms; $487.5 million in fines will go to states according to their population.

The claims by investors who believe they were cheated are expected to surpass the former amount by far. Just how and to whom the investor restitution fund will be parceled out is unclear, and an administrator to oversee the process must first be named.

Already, investor advocates and lawmakers have criticized the states for largely planning to use the money for things like road improvement and school construction, while only a few will channel it to aggrieved investors.

The firms — including Merrill Lynch, Citigroup’s Salomon Smith Barney and J.P. Morgan Chase — neither admitted to nor denied the regulators’ allegations that they deceived investors.

Under the settlement, the firms will not be able to deduct any of the payments of fines against their taxes. But because that prohibition does not extend to the firms’ payments to compensate investors or pay for independent research or investor education, some lawmakers have criticized the settlement.

Sen. Charles Grassley, R-Iowa, chairman of the Senate Finance Committee, already has proposed legislation to put more restrictions on the firms’ ability to deduct payments against their taxes so that U.S. taxpayers won’t have to pick up part of the tab.

Similarly, the firms promised in the settlement not to seek insurance reimbursement for fines they paid, but it’s not clear whether they’ll try to deduct more than $900 million in other payments related to the pact. The accord does not clearly address whether millions of dollars paid toward the restitution fund, independent research and investor education may be recovered.

Regulators may have intentionally left these details up to state courts, which handle most insurance disputes. If the firms do try to deduct parts of their payments, their insurers are likely to balk, experts say.

The other seven firms who took part in the settlement are Morgan Stanley, Credit Suisse First Boston, Bear Stearns, Goldman Sachs, Lehman Brothers, U.S. Bancorp Piper Jaffray and UBS Warburg.