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Top rating agencies are to be sued by pension giant
15.07.09
The world's top rating agencies are to be sued by one of America's most powerful institutional investors over their role in credit boom and bust.
Moody's, Standard & Poor's and Fitch have been accused in court filings by Calpers, the wealthy Californian state pension fund, of bandying around AAA-ratings on some of the most toxic debt packages.
The lawsuit says the agencies gave structured investment vehicles “wildly inaccurate and unreasonably high” ratings before they imploded in the financial crisis.
They are formally accused of “negligent misrepresentation” which, says Calpers, has left its pension funds with losses that could run to more than $1 billion.
The agencies are further accused of using methodologies to rate complicated mortgage-backed securities that were “seriously flawed in conception and incompetently applied”.
The rating agencies have been pilloried by politicians and investors over their role in the credit crunch but Calpers' move is the first high-profile attempt to make Moody's, S&P and Fitch pay for their alleged failings.
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This is not the first set of actions against the rating agencies. All are named defendants in connection with class action lawsuits relating to the rating agencies roles in securitizing mortgages:
http://www.classadvocate.com/?direct=y&category=category&category_level1%5B%5D=17%3A577
- Class Advocate, Nashua, NH
