Maui County has filed a lawsuit against the brokerage firm Merrill Lynch Pierce Fenner & Smith Inc., charging that the business misrepresented the sale of $44.2 million in student loan auction rate securities.

“;The County of Maui was told that the investments could be easily accessed, just like cash,”; Maui County Mayor Charmaine Tavares said yesterday. “;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.”;

Merrill Lynch spokes-man Bill Halldin said, “;We acted appropriately and made relevant disclosures to the county concerning auction rate securities and intend to vigorously defend ourselves in this matter,”; he said.

In its Feb. 12 lawsuit filed in U.S. District Court, the county contends that Merrill Lynch sold the auction rate securities between Aug. 16, 2007, and Jan. 16, 2008, with the understanding they were safe, short-term, liquid investments.

The county was buying interest-bearing student loans that were being sold regularly at an auction. But most auctions have failed since early 2008.

The county said it does not have access to $32 million of its investments.

Attorney Joachim Cox, representing the county, said the brokerage firm failed to disclose the high level of its trading activity as a market maker in the purchase of student loan auction rate securities, and the level of communication between its trading desk and research arm providing information to investors.

Cox said the brokerage firm also did not inform the county that the liquidity of the student loan auction rate securities was beginning to fail.