"While investors had been expecting some good news in the form of a mortgage settlement and the ability to put the issue in the past, this announcement suggests that investigations into banks' practices related to securitizing residential mortgages is unlikely to end any time soon, " KBW analysts wrote.

The SPDR Select Sector Financials ETF was down 0.6% Wednesday morning. Bank of America ( BAC), JPMorgan Chase ( JPM), Wells Fargo ( WFC) and Citigroup ( C), who are engaged in mortgage settlement negotiations, all saw their shares dip by more than 1% in early trading.

--Written by Shanthi Bharatwaj in New York

>To contact the writer of this article, click here: Shanthi Bharatwaj.

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