Allegations widened this morning that Wall Street banks deliberately offloaded risky securities on retail and corporate customers even as the market for them was falling apart.

In another big blow to the Street's reputation, banks are accused of pushing so-called auction-rate securities onto consumers with misleading sales tactics before the market for the products collapsed in February.

Actions have been launched against firms from individual investors and big companies. About 250 public companies and tens of thousands of private individuals held the securities.

The latest action came in the form of a lawsuit filed against UBS late last night by the state of New York for an alleged "multi-billion dollar fraud."

At least seven UBS executives dumped $21 million (£10.6 million) in auction-rate securities that they held in personal accounts as the credit market began to crash, the state says.

"Top executives jumped ship as soon the securities market started to collapse, leaving thousands of customers holding the bag," Attorney general Andrew Cuomo said.

Victims included tens of thousands of individual investors along with 250 companies, Cuomo says.

UBS denies the claims and says it will defend itself "vigorously".

Cuomo is demanding that the bank buy back the securities from customers at face value, and repay any profits it made on the deals as well as damages.

He warned that other banks could also face similar accusations.

"UBS is not alone in this scheme. There are other institutions which participated, but UBS is a major player," he said.