CalPERS announced on Wednesday it settled a lawsuit against Moody's Investors Service for $130 million, a news release from the pension fund said.
The settlement ends a suit filed in 2009 by the $285.7 California Public Employees' Retirement System, Sacramento, against Moody's and Standard & Poor's for losses from three structured investment vehicles in 2006 and 2007, alleging that the investments relied on inaccurate risk assessments in that assets such as subprime residential mortgage-backed securities, collateralized debt obligations and other asset-backed securities believed to be liquid were in fact illiquid.
CalPERS settled with S&P on its part of the lawsuit in early 2015 for $125 million, and the new settlement with Moody's brings the total recovery to $255 million.
"This resolves our lawsuit against Moody's and restores money that belongs to our members and employers," said Matthew Jacobs, CalPERS' general counsel, in the news release.
A Moody's spokesman said in an e-mail: “The resolution of this long-running litigation, which concerns three structured investment vehicles that Moody's rated in 1995, 2002 and 2005, is in the best interest of our company and its shareholders.”
CalPERS spokesman Joe DeAnda could not be immediately reached for further information.