A California Court of Appeals panel allowed a lawsuit by the California Public Employees' Retirement System to proceed against two firms' ratings on subprime mortgages that led to $800 million in losses for the $293 billion pension fund.
In its ruling on May 23, the three-member panel in San Francisco gave no reason for rejecting a motion by Standard & Poor's and Moody's Investors Service to dismiss the case.
Sacramento-based CalPERS lost $800 million from the 2006 and 2007 investments after the housing market collapse and sued the rating agencies in federal court in 2009, alleging that inaccurate risk assessments led to the losses.
“We are gratified that the court affirmed CalPERS' right to pursue claims against the rating agencies relating to these investments,” said CalPERS spokesman Joe DeAnda in an e-mail.
Officials of S&P and Moody's could not be immediately reached for comment.