The $173 billion California Public Employees Retirement System (CalPERS) is suing ratings agencies because they gave AAA ratings to Structured Investment Vehicles (SIVs) in which CalPERS parked $1.6 billion of its pensioner's money in 2006. In 2007 and 2008, the SIVs collapsed and now CalPERS is putting the blame on the ratings agencies.
But here's the thing -- CalPERS had no idea what was actually inside the SIVs. In fact, the vendors who sold the SIVs said that they would not reveal what was inside of them in order to protect their trade secrets. I am assuming that CalPERS employs investment professionals to make investment decisions. If so, those professionals were either incredibly stupid or were simply not doing their jobs when they decided to "invest" $1.6 billion in an investment that they were prohibited from understanding by its seller.