New York Attorney General Andrew Cuomo says he has secured agreements with JPMorgan Chase & Co. and Morgan Stanley that will return more than $7 billion to investors.

Morgan Stanley also will pay a $35 million penalty, and JPMorgan will pay a $25 million penalty.

Under the agreement, JPMorgan and Morgan Stanley agreed to buy back all liquid auction-rate securities from retail customers, charities and small- to mid-sized businesses. JPMorgan must buy back the auction-rate securities by Nov. 12. Morgan Stanley must do so by Dec. 11.

By Cuomo's count, he has secured about $30 billion for some 100,000 investors.

The attorney general said the agreements settle allegations that JPMorgan and Morgan Stanley made misrepresentations in their marketing and sales of auction-rate securities.

Auction-rate securities are debt investments issued by municipalities, student-loan agencies, closed-end funds and others, with interest rates that are reset at weekly or monthly auctions run by the investment firms.

The $330 billion market collapsed in February when investors became alarmed at the prospect of corporate borrowers covering debt service on the securities.

Aug. 11, Morgan Stanley announced plans to repurchase auction-rate securities that were purchased prior to Feb. 13.

Cuomo's office issued a statement at the time concerning Morgan Stanley's plans.

"This is too little, too late, and our investigation into Morgan Stanley continues," said Cuomo's spokesman, Alex Detrick.

Last week, Cuomo's office secured agreements with UBS and Citigroup that will return more than $20 billion to investors.

"Returning billions of dollars back to investors not only protects their interests but also increases confidence in the entire market," Cuomo said. "Today's multibillion-dollar agreements are the latest victories for investors seeking relief from the collapse of the auction-rate securities market, which has left a stranglehold on billions of dollars."