S&P Ratings States Reject Support New Jersey to California

While suing Standard & Poor’s for fraud, states from New Jersey to California ironically are helping fund the world’s largest credit rater’s legal defense by requiring that their pension funds use its rankings.

New Jersey, which sued S&P and its parent McGraw Hill Financial Inc. on Oct. 9 for misleading investors about the independence of its ratings, mandates that the retirement funds of state workers buy securities graded by S&P, Moody’s Investors Service or Fitch Ratings. California, which called S&P a “toll collector” in a February lawsuit, requires investments in its Public Employees’ Retirement System to be rated by S&P and Moody’s, according to the bylaws.