The powerful pension, CalPERS, recentlly filed suit against some of the ratings agencies responsible for "grading" bundled and securitized financial instruments that contained
CalPERS accuses Moody’s, Standard & Poor’s, and Fitch Ratings of providing “wildly inaccurate and unreasonably high” ratings on mortgage-backed securities that cost the fund hundreds of millions in losses.
In WSF reports in this article
The lawsuit by Calpers, which has about $173 billion in assets and manages the retirement benefits of more than 1.6 million California employees, retirees and their families, sheds light on how heavily even the most sophisticated investors relied on Moody's, S&P and Fitch to analyze mortgage securities and other complex investment vehicles
Calpers accuses the ratings agencies of acting "in a morally blameworthy fashion by failing to exercise reasonable care in their rating actions," according to the suit. The California pension fund claims that "no amount of due diligence" by its own analysts could have given Calpers "actual knowledge" of how conflicts of interest at the ratings agencies affected their assessment of SIVs or how heavily exposed the securities were to subprime loans, according to the lawsuit.
The original suit filed by which was filed by Boston securities class action firm Berman DeValerio is available.
