Lehman Brothers Holdings Inc
Western Digital Corp
The companies allege that Lehman knew, but failed to inform them, that the securities were not supported by a broad, fully-functioning market.
Lehman spokeswoman Kimberly Macleod declined to comment.
A spokesman for Lake Forest, California-based Western Digital also had no comment, and a spokesman for Costa Mesa, California-based Ceradyne could not immediately be reached.
The firms are seeking to recoup funds they invested in asset-backed securities, as well as punitive damages.
Auction-rate debt has rates that reset in periodic auctions, but some brokerages told investors the debt was as good as a cash substitute. When the market froze, many investors found themselves saddled with the debt.
(Reporting by Lilla Zuill, Editing by Ian Geoghegan)