Fitch Settles With CalPERS Over Some AAA Ratings

FOXBusiness

Fitch Ratings has settled a lawsuit brought by the California Public Employees Retirement System in which the giant pension fund accused the three largest ratings firms of rubber stamping their top ratings on some complex securities.

CalPERS, which claimed it lost $1 billion as a result of the bad ratings, is still suing Moodys Investors Service (MCO:NYSE) and Standard & Poors.

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The settlement does not require Fitch to make payments to CalPERS. The settlement papers were filed Friday.

Fitch is pleased with the resolution of this case and the disposition reached with CalPERS, Fitch spokesman Dan Noonan said in an e-mail.

The lawsuit filed in 2009 targets complex securities known as structured investment vehicles in which an array of loans are packaged and sold to investors. Many of these securities were loaded with subprime loans and other debt obligations that soured during the financial crisis of 2008.

CalPERS is arguing that many of these products should never have been packaged into investment-grade securities, and that the reason they were is because the ratings firms improperly gave them their highest AAA ratings.

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