Moody’s pays $130 million to Settle Financial Crisis Case

March 10, 2016, 4:54 PM UTC
Ratings Agencies in New York
Pedestrians walk past the Moody's Investors Service Inc. logo displayed outside of the company's headquarters in New York, U.S., on Tuesday, Feb. 21, 2012. Moody's Corp. is a credit rating, research, and risk analysis firm. Photographer: Scott Eells/Bloomberg via Getty Images
Photograph by Scott Eells — Bloomberg via Getty Images

California’s public pension system, Calpers, said it has reached a $130 million settlement with Moody’s and Moody’s Investors’ Service to resolve a case involving inflated grades of residential mortgage deals that later faltered.

The lawsuit stems from losses the pension fund suffered after the collapse of the housing market and defaults on formerly AAA-rated securities that were backed by pools of residential mortgages, Calpers said in a statement.

The California Public Employees Retirement System, or Calpers, brought the lawsuit against Moody’s and other rating agencies in 2009.

Calpers, the largest pension fund in the United States, has previously settled with Fitch Ratings and Standard & Poor’s, the other rating agencies that were named in the lawsuit.

S&P, a unit of McGraw Hill Financial Inc, settled with Calpers in February last year for $125 million.

The settlements rank as the largest known recovery from Moody’s and S&P in a private lawsuit for civil damages, Calpers said.

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