NEW YORK, March 14 (Reuters) - UBS (UBSN.VX: Quote, Profile, Research) and a brokerage unit were sued by an investor who accused the firm of encouraging clients to place money in auction-rate notes instead of other short-term investments, without disclosing the risks, The Wall Street Journal reported on Friday.

The lawsuit, which is seeking class-action status, was filed by Ronald Kassover, a resident of New York state who maintains an individual retirement account at UBS, the newspaper said.

A UBS spokesperson was not immediately available, but a spokeswoman told The Wall Street Journal: "UBS is committed to addressing our clients' concerns about the market events that caused the breakdown of liquidity for auction-rate securities."

She added, "We are working with clients, on a case-by-case basis, to address their immediate liquidity needs, offering such solutions as margin loans and lines of credit at preferred lending rates. In addition, we are committed to working with our peers and industry groups to develop solutions to restore liquidity."

Auction-rate notes are long-term bonds with interest rates reset periodically through an auction. Those auctions have not been meeting enough demand to reset interest rates recently, forcing some issuers to pay higher penalty rates, and investors to hold onto their securities. (Reporting by Dan Wilchins; Editing by Leslie Adler)