A bill that slipped through the Utah Legislature with Gov. Jon Huntsman Jr.'s tacit endorsement sparked an angry revolt Thursday among prime Wall Street firms with Utah operations, which could face hefty state fines for trading irregularities.

"There's blood in the water," said Howard Headlee, president of the Utah Bankers Association, who said brokerage houses are "talking about not doing business in Utah."

It also could be a problem for lobbyist and political operative Douglas S. Foxley, who handed lawmakers a bill written for Internet retailer Overstock.com, which complains it has been a target of persistent trading abuse. Foxley's lobby group also represents industrial banks in Utah, some owned by large brokerage firms — clients he could lose.

Tony Taggert, an officer for Morgan Stanley — which operates an industrial bank in Utah and employs almost 5,000 with Discover Card operations here — promised a lawsuit on behalf of the Securities Industry Association if Huntsman signs the measure.

Industry and government insiders said Fidelity Investments, Bear Stearns and Zions Bank, which operates a securities division, were among major brokers upset over the legislation.

None of the three brokerages returned calls Thursday from The Associated Press. Nor did Foxley.

Headlee said he was at the center of bitter recriminations in a conference call of major brokers Thursday, the day after the Legislature's approval.

At issue is short selling, when investors borrow stock hoping the share price declines so they can return it to brokers and pocket the difference. Overstock.com asserts it has been a target of naked short selling, where brokers send IOUs they can't honor through a stock clearinghouse when they run out of shares to lend for short selling.

Overstock.com chief Patrick Byrne says many brokers never settle these trades. The practice tends to lower a company's share price by artificially creating more sellers than buyers.

The bill approved by the Legislature fines brokers who accumulate too many unsettled trades in a given company after five trading days. The fines start at $10,000.

"This is the single best thing Utah could do to attract entrepreneurs, especially in high-tech and biotech," said Byrne, who pledged to expand operations here, doubling the company's payroll.

Michael Mower, Huntsman's deputy chief of staff, said brokers never expressed opposition to a bill that almost passed during the Legislature's January-March general session.

As for threats of brokers leaving Utah, "We're also hearing from companies that are promising to bring jobs to Utah because of this," Mower said.