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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