New York Attorney General Andrew Cuomo told CNBC that his investigation into auction-rate securities sold by banks and brokerages is far from over.
"You have literally dozens of institutions involved," Cumo said in a live interview. "We're starting at the top and working our way down."
Cuomo's comments came after announcing earlier Thursday a settlement with two big brokerages, PMorgan Chase and Morgan Stanley , whichagreed to repurchase a combined $7 billion in auction-rate securities at face value from investors.
That followed similar settlements last week by Citigroup and Swiss Bank UBS .
Auction-rate securities are investments that resemble corporate debt, but with interest rates reset at regular auctions. The market for the securities collapsed in February amid deterioration in the broader credit markets.
State and federal regulators have been investigating whether brokerages and banks falsely told clients that auction-rate securities—a $330 billion market—were as safe and liquid as cash.
"I understand there are hundreds of thousands of (investors) in this situation, and we're going to do the best for them," Cuomo said in the CNBC interview.
As part of the settlement, Morgan Stanley and JP Morgan Chasewill also pay a combined $60 million in fines, with Morgan Stanley paying $35 million and JPMorgan $25 million said.
Other firms involved in the probe so far include Merrill Lynch, GoldmanSachs, Lehman Brothers and Wachovia .
Thursday's settlements may add to pressure on Merrill Lynch, Wachovia and other companies that sold auction-rate securities to settle with regulators.
Watch the entire Cuomo interview at left.
"The publicity is already bad enough for these banks," said Joseph Gordon, president of Gordon Asset Management LLC in Durham, North Carolina. "There is no incentive to drag it out, and run up in legal bills."
Several states have investigations into other brokerages that sold the debt to clients.
Merrill has offered to buy back as much as $12 billion of the debt, but has not settled with regulators. Cuomo called that offer "a good thing," but said it wasn't enough. He said he has had talks with that company.
Video: Charlie Gasparino talks about what's missing from the settlement
Wachovia, meanwhile, is in talks about a possible $9.5 billion debt buyback involving regulators led by Missouri Secretary of State Robin Carnahan. The bank has set aside $500 million in reserves for a possible settlement.
Merrill spokesman Mark Herr and Wachovia spokeswoman Christy Phillips-Brown declined to comment. Carnahan did not immediately return calls seeking comment.
Goldman Sachs declined to address a report in The Wall Street Journal that it is refusing to buy back auction-rate debt from its wealthy clients.
Spokeswoman Andrea Raphael said Goldman "has been working with clients to address their liquidity needs," and is cooperating with regulators.
—Reuters contributed to this report