UPDATE 1-Pension fund sues Moody's over subprime ratings

(Updates with suit details, Moody's spokeswoman, adds byline)

By Emily Chasan

NEW YORK, Sept 26 (Reuters) - A union pension fund brought a shareholder lawsuit against Moody's Corp (MCO.N) on Wednesday claiming the rating agency did not tell investors it "assigned excessively high ratings" to bonds backed by subprime mortgages.

The suit, filed in U.S. district court in Manhattan on behalf of the Teamsters Local 282 Pension Fund, claims Moody's role in rating the subprime loan securities hurt the rating agency's stock price as the housing sector declined.

The suit, which also names Moody's chief financial officer, Linda Huber as a defendant, is seeking class action status.

A Moody's spokeswoman declined to comment, saying the company had not yet had a chance to review the lawsuit. Huber was not immediately available to comment, the spokeswoman said.

The suit claims Moody's and Huber knew or "recklessly disregarded" non-public information about how its ratings of the subprime loan securities would affect its financial results and stock price.

Moody's shares are down more than 25 percent year-to- date.

"Moody's maintained its excessively high ratings, rather than downgrade the bonds to reflect the true risk of owning subprime mortgage-backed debt instruments," the suit said.

The lawsuit claims that Moody's then shocked investors in July when it announced it was downgrading hundreds of mortgage- backed securities.

The allegations in the pension fund's suit are similar to those made in a suit Moody's shareholder Raphael Nach filed solely against Huber in U.S. District Court in Chicago in July. That suit is also seeking class action status. (Reporting by Emily Chasan)