Appeals court sides with ratings firms, upholds dismissal of Ohio lawsuit

A U.S. Court of Appeals on Monday upheld the dismissal of a lawsuit by Ohio's five state pension funds against Standard & Poor's, Moody's Investors Service and Fitch Ratings, alleging the firms' ratings of mortgage-backed securities were faulty and caused the pension funds to buy investments that lost millions of dollars.

The decision by judges Ronald Lee Gilman, Julia Smith Gibbons and John M. Rogers of the 6th Circuit in Cincinnati upholds a September 2011 dismissal by U.S. District Court Judge James L. Graham in Columbus.

Mr. Graham had ruled in favor of the ratings agencies that its ratings were predictive opinions and that without specific allegations of intent to defraud, the companies couldn't be held liable.

The pension funds named as plaintiffs in the suit were the $76.4 billion Ohio Public Employees Retirement System; the $64.3 billion Ohio State Teachers' Retirement System; the $12.1 billion Ohio Police & Fire Pension Fund; the $10.5 billion Ohio School Employees Retirement System; and the $700 million Ohio State Highway Patrol Retirement System, all of Columbus.

Mark Moretti, spokesman for Mike DeWine, Ohio attorney general, said the decision is being reviewed.