In the first decision of its kind stemming from class action litigation over the collapse of the auction-rate securities (ARS) market, a federal appeals court panel in New York ruled Monday that Merrill Lynch had adequately disclosed to customers that it was preventing auctions from failing.

The U.S. Court of Appeals for the Second Circuit rejected a bid to reinstate a securities fraud class-action suit filed by investors against Merrill Lynch, now Bank of America Merrill Lynch. A lower court dismissed the case last year after deciding Merrill’s disclosures were sufficient.

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