Saturday, April 4, 2009

ARS Update - Texas Instrument Files Against Morgan Stanley and Others

Texas Instruments Inc (TXN.N) has sued Citigroup Inc (C.N), Morgan Stanley (MS.N) and Bank of New York Mellon Corp (BK.N), accusing the banks of misleading the chipmaker into buying $524 million of auction-rate securities that have become illiquid.

In a complaint filed Wednesday in a Texas state court in Dallas County, Texas Instruments said the banks falsely marketed the securities, which were backed by student loans, as a low-risk, liquid alternative to other short-term investments. It said the banks also failed to disclose the extent to which they participated in auctions to support the market.

As a result of the banks' actions, "Texas Instruments was unable to accurately analyze the risks and possible interest rates for the auction-rate securities it was purchasing or holding," the Dallas-based company said.

Texas Instruments is seeking to rescind its auction-rate purchases and be awarded interest and other costs.

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