Comverse Technology Inc, has sued Merrill Lynch for alleged fraud over the sale of tens of millions of dollars of auction-rate securities in 2006 and 2007.  Merrill Lynch, acting as Comverse's broker-dealer and adviser, marketed the securities as safe cash equivalents, but the market for them froze after Merrill stopped making a market for them, according to the lawsuit, which was filed in NY State Supreme Court in Manhattan.  Comverse claims it was left with securities worth "a fraction of" the $46.2 million it invested and is seeking compensation for its losses. Merrill and more than one dozen other major banks agreed to buy back billions of dollars of auction-rate securities in settlements with regulators in 2008 and 2009. Bank of America spokesman Bill Halldin said the bank has received the complaint and said that "most courts have rejected similar claims." The case is Comverse Technology Inc v. Merrill Lynch, Pierce Fenner and Smith Inc, New York State Supreme Court, New York County, No. 653315/2011.  [Reuters 12/1/11]