Dow Corning Sues Merrill Lynch Over Auction-Rate Securities
By Chad Bray, Of DOW JONES NEWSWIRES
NEW YORK -(Dow Jones)- 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
(END) Dow Jones Newswires
11-20-091736ET
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