Ohio Attorney General Richard Cordray has filed a lawsuit against Standard & Poor's (S&P), Moody's and Fitch, claiming the agencies inflated ratings of mortgage-backed securities in exchange for fees from securities issuers.
The firms misled institutional investors, including Ohio pension funds, in regard to bond risk, Cordray says.
‘The rating agencies assured our employee pension funds that many of these mortgage-backed securities had the highest credit ratings and the lowest risk. But they sold their professional objectivity and integrity to the highest bidder," Cordray said in a press statement issued Friday.
S&P and Moody's deny the charges, saying the claims are without merit, according to a New York Times article. Fitch declined to comment for the NYT piece, saying the company had not received Cordray's complaint.
Cordray's suit is being brought on behalf of the Ohio Public Employees Retirement System, the State Teachers Retirement System of Ohio, the Ohio Police & Fire Pension Fund, the School Employees Retirement System of Ohio and the Ohio Public Employees Deferred Compensation Program.