Maui County has filed a federal lawsuit against Merrill Lynch, saying the firm misled the county into buying student loan auction-rate securities that became illiquid.

The county announced the suit last week, and said it has filed a similar claim with the Financial Industry Regulatory Authority.

“The county of Maui was told that the investments could be easily accessed, just like cash,” Maui County Mayor Charmaine Tavares said in a news release. “Assurances by Merrill Lynch at the time of the investment turned out to be false, and we are seeking justice for the taxpayers of Maui County.”

Maui County purchased $44.2 million in student loan auction-rate securities through Merrill Lynch between August 2007 and January 2008, before the firm merged with Bank of America, according to the release.

The county says $32 million of that remains illiquid.

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