Major credit rating agencies won a fresh legal victory on Monday when a federal appeals court rejected a lawsuit by Ohio pension funds that sought to recoup millions of dollars of losses on risky mortgage debt they said were based on flawed, inflated ratings.
The 6th U.S. Circuit Court of Appeals in Cincinnati upheld the September 2011 dismissal of the lawsuit against Moody's Investors Service, Standard & Poor's and Fitch Ratings.
Investors, regulators and politicians have criticized the agencies for exacerbating the housing and financial crises by awarding high ratings to risky debt that soon turned toxic. The agencies have long said their ratings were protected opinions under the First Amendment to the U.S. Constitution.
Five pension funds led by the Ohio Police & Fire Pension Fund said they lost $457 million by having made 308 investments in mortgage debt between Jan. 1, 2005, and July 8, 2008, relying on "triple-A" ratings that proved "unfounded and unjustified."
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