CalPERS agreed to a settlement with Fitch Ratings, one of three credit-rating firms the $228 billion pension fund claimed wildly misrepresented the financial health of structured investment securities they rated, causing some $1 billion in investment losses for the pension fund.
Under the terms of the settlement, filed Aug. 26 in California Superior Court in San Francisco, Fitch will make no payment to CalPERS, including damages or legal or other costs, while CalPERS agreed to dismiss Fitch from the case, ending the credit-rating firm’s involvement with the case.
Fitch agreed in the settlement to provide CalPERS with a copy of documents and a transcript from a separate case, Abu Dhabi Commercial vs. Morgan Stanley, Moody's Investors Service, Standard & Poor's and McGraw-Hill, filed in August 2008.
“Dismissal of the two Fitch defendants in the CalPERS complaint will streamline the litigation against two other credit-rating agencies — Moody’s and Standard & Poor’s,” according to a statement by the California Public Employees’ Retirement System, Sacramento.
“The dismissal will not impact the case … in San Francisco Superior Court, or otherwise limit any recovery against Moody’s and S&P. CalPERS can still fully recover its damages if it prevails against Moody’s or S&P, which will not be able to avoid liability through the Fitch dismissals.”
Wayne Davis, CalPERS spokesman, said the pension fund would not comment beyond the statement.
“Fitch is pleased with the resolution of this case and the disposition reached with CalPERS,” according to a statement from the firm.
The pension fund sued the three credit ratings firms in July 2009.
The settlement must be approved by Judge Richard A. Kramer, who is presiding over the case.
A trial date hasn’t been set in the case.