Disclosures by Merrill Lynch that it routinely intervened to place support bids in the market for auction rate securities is sufficient to avoid liability under the Securities Exchange Act of 1934, the U.S. Court of Appeals for the Second Circuit ruled yesterday.

Against the opinion of the Securities and Exchange Commission, the circuit said that disclosures made by Merrill, partly to comply with a previous settlement with the SEC, put investors on notice that Merrill sometimes, but not always, placed bids to ensure the market for the securities would not fail.

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