California has filed suit against Wall Street's biggest credit rating agency, Standard & Poor’s, charging the firm with violating the state's False Claims Act by using “magic numbers” and “guesses” to inflate ratings that ultimately cost California public pension funds an estimated $1 billion.

The action was filed Tuesday in San Francisco Superior Court and came a day after federal prosecutors filed suit against the bond-rating agency, alleging that S&P gave top marks to troubled mortgage-backed securities that later failed, helping to trigger the financial crisis.

California will seek $4 billion in damages after S&P’s ratings cost state pension funds what it estimates are about $1 billion in losses. The state can seek triple damages, along with penalties, under the False Claims Act.

“Those who lost homes in California were first-grade teachers, firefighters ... we talk about the impact of S&P’s conduct, it’s profound,” Atty. Gen. Kamala D. Harris told the Times in Washington after a news conference there announcing the federal and state suits. “They pretended to be an independent agency and we believe the evidence is clear it was quite the contrary.”

Read more at LA Times