Andrew Cuomo, New York attorney-general, is investigating the $330bn auction-rate securities market that has recently collapsed, leading to unexpected high interest rates for numerous municipal borrowers and losses for investors unable to sell their holdings.

Subpoenas were this week sent to 18 banks and brokerages, people familiar with the investigation said. The recipients include UBS, Goldman Sachs, Citigroup, Bank of America, JPMorgan Chase, Lehman and E-Trade Financial. The companies declined to comment or could not be reached.