The AAA distinction is the highest bond credit rating handed out by three of the largest ratings agencies: Standard & Poor's, Fitch Ratings, and Moody's Investors Service (which displays the rating as Aaa, rather than AAA). The AAA rating is meant to signify a fiscally secure company and, in turn, is meant to show that investing in a bond or security from that company is a prudent financial move.

This week, CalPERS (California Public Employees' Retirement System) sued S&P, Fitch, and Moody's for irresponsible credit rating behavior. As Barry Ritholtz reported (and as we discussed earlier this week), CalPERS sustained a loss of approximately $1 billion after investing in structured investment vehicles that the agencies gave AAA ratings. CalPERS claims that the AAA ratings these three credit rating agencies gave the SIVs were grossly off-base and inaccurately applied to an extent that would suggest negligence.

Of course, this isn't the only time the ratings agencies have caught flak for handing out a AAA rating. Many attribute part of the economic crisis to the inappropriate AAA ratings given to unstable mortgage-backed securities. Meanwhile, General Electric (GE) had a AAA rating, even as it sought a massive government bailout back in November. That rating has since been dropped to an AA+ rating.