Dow Corning Sues Merrill Lynch Over Auction-Rate Securities
20 Novembro 2009 - 8:51PM
Dow Jones News
Dow Corning Corp., a joint venture of Dow Chemical Co. (DOW) and
Corning Inc. (GLW), sued Merrill Lynch & Co. on Friday for
alleged misrepresentations regarding the sale of $166 million in
now-illiquid auction-rate securities.
The lawsuit, filed in U.S. District Court in Manhattan, alleged
Merrill Lynch misrepresented the risk that auctions would fail and
failed to disclose the fact that the auction-rate securities market
was "artificially sustained by the continued bidding and
purchasing" by Merrill Lynch and other broker-dealers.
"Defendants were artificially supporting and manipulating the
ARS market to maintain the appearance of liquidity while they knew
the market was illiquid and collapsing," the lawsuit said.
Hemlock Semiconductor Corp., a joint venture between Dow
Corning, Shin-Etsu Handotai Co. and Mitsubishi Materials Corp.
(5711.TO); and Devonshire Underwriters LLC, a captive insurer, also
are plaintiffs in the lawsuit. Dow Corning manages cash and certain
assets for Hemlock and Devonshire.
Merrill Lynch is a unit of Bank of America Corp. (BAC).
A Merrill Lynch spokesman didn't immediately have a comment when
reached Friday.
-By Chad Bray, Dow Jones Newswires; 212-227-2017;
chad.bray@dowjones.com
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