The federal agent who posed as a businessman in order to investigate the campaign financing of John C. Liu, the New York City comptroller, said on Monday that his superiors had prematurely ended the undercover operation, even though he felt there were indications that campaign officials were involved in irregularities.

“The undercover operation could have gone on further,” the special agent, John Chiue, testified. He acknowledged sending an e-mail to a colleague, saying, “Everything points to the next level.”

Agent Chiue testified in Federal District Court in Manhattan in the trial of two of Mr. Liu’s former associates: Jia Hou, a former campaign treasurer, and Xing Wu Pan, a fund-raiser. Both are charged with conspiring in an illegal scheme to funnel money to Mr. Liu’s campaign through so-called straw donors; they have each pleaded not guilty. Mr. Liu, a Democrat who is now running for mayor, has not been charged with wrongdoing.

“I believe I was doing a good job,” said Agent Chiue, of the Federal Bureau of Investigation’s Houston division, “but people above me, above my pay scale, they made the decision to terminate the undercover operation. And as an agent, I must abide by my management’s decision.”