calpers

By Dale Kasler
dkasler@sacbee.com
Published: Tuesday, May. 27, 2014 – 11:02 am

CalPERS has defeated a bid by Wall Street’s leading credit ratings agencies to toss out the pension fund’s lawsuit over a $1 billion investment loss.

The ruling Friday by the state 1st District Court of Appeal means CalPERS can continue to pursue its case against Moody’s Investors Service and Standard & Poor’s. Without offering an explanation, the court upheld a 2012 lower-court ruling that kept the CalPERS lawsuit alive.

The case stems from a disastrous $1 billion investment the California Public Employees’ Retirement System made in 2006 in three deals known as “structured investment vehicles,” a blend of assets including mortgage-backed securities and car loans. In its lawsuit, the pension fund said it understood little about what was in the investment vehicles but invested because they carried the “highest credit ratings” from Moody’s, S&P and a third agency, Fitch Ratings.

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