Register  
 
 
 
 
 
Local funds won't follow CalPERS lawsuit
Thursday, 16 July 2009 12:10pm

One of the US' biggest pension funds, the $223 billion CalPERS, has filed a lawsuit against three of the world's most powerful rating agencies to claw back some of its losses from the GFC, but local super funds look unlikely to follow suit.

CalPERS had filed a suit in a California state court in relation to $1 billion in losses that it claimed were a result of inaccurate credit ratings from Moody's, Fitch Ratings and Standard & Poor's, according to a report by Reuters.

CalPERS said the "top" ratings on highly structured investment vehicles and complex packages of securities including subprime mortgages did not properly reflect the risk of these investments.

The suit said the AAA ratings given by the agencies "proved to be wildly inaccurate and unreasonably high", according to Reuters.

Despite CalPERS setting the precedent for other pension funds on taking rating agencies to court, local superannuation funds seem unlikely to follow suit.

For instance Greg Sword, chief executive of the $2 billion Labour Union Co-operative Retirement Fund, said the situation of pension funds in the US are different to those in Australia, because they relied on these agencies to provide ratings on instruments such as collateralised debt obligations and sub-prime mortgages - which in this case have proven to be flawed.

"I think the main concern with CalPERS and others would be the ratings that the agencies give to [products like] CDOs," said Sword.

"In our case, we weren't caught in that sort of programs, and I doubt that any of the Australian companies were caught [up] in those circumstances. You have to be a victim before you can claim.

"It doesn't affect us as we're not involved in any of that, but we understand that they [CalPERS] might be reasonably upset and they've relied upon the judgment of rating agencies," he said.

CalPERS reportedly bought $1.6 billion worth of structured investment vehicles in 2006, before they collapsed in 2007 and 2008.

The fund is seeking damages but did not specify the amount, Reuters noted.

News Search   
VideoBrought to you by
MAX
We invite you to the 2014 Marketing, Advertising and Sales Excellence (MAX) Forum and Awards, the premiere event for financial services professionals who are raising the standards in marketing, sales and ... Watch video
How to distribute 8% per year from global equities
Investor needs have not changed, what has changed is the level of income available from traditional yield sectors such as cash and bonds. This presentation will cover in detail how investors can diversify ... Watch video
Developing investment opportunities
Given the evolution of Australian Equities funds over the last 10 years, how has the Growth team's investment strategy remained relevant? Watch video
Betashares high interest cash ETF
The Betashares high interest cash ETF is currently returning significantly above the default cash rates offered on the larger wrap platforms. Learn more about this product in this exclusive video featured ... Watch video
Get it
Daily
FREE to your inbox, get the Financial Standard Daily Email.
Get the Free
iPad app
Download the Financial Standard iPad app for FREE
Industry
Events
APR
19
MAY
28
Asset Allocation 2014 Forum in Sydney,
29
2014 Annual Stockbrokers Conference
JUN
18
MAX: the Marketing, Advertising and Sales Exellence Forum and Awards
APR
28
FPA TASA road shows
29
FPA TASA road shows
News
Bites

$245 (inc GST) for 1 year
 
 
About Us
Contact Us
Privacy Policy
Terms & Conditions
Comments Policy
Events Calendar

Register
Archive
CPD Login
Register

Managed Funds
- Australian
- Global
Superannuation Funds
- Specialist
- Diversified
"Guide To" Series
Product Launches
Showcases

Home
Shows
Learning
Events
Profiles
Showcase
Platform Report
Mandate Chaser
Roundup
Advantage
Benchmarking

FS Advice
FS Super
FS Private Wealth
Copyright © 1992-2014 Rainmaker Group
All material on this site is subject to copyright. All rights reserved. No part of this material may be reproduced, translated, transmitted, framed or stored in a retrieval system for public or private use without the written permission of the publisher.
Link to something nGnGJp7O