The state of California sued investment banking major Morgan Stanley over losses suffered by the state’s public pension funds when the housing market crashed in 2008. The lawsuit, filed Friday, accused the bank of glossing over the risks in toxic residential mortgage-backed securities and "structured investment vehicles" it had marketed between 2004 and 2007.

Kamala Harris, the state's attorney general, accused Morgan Stanley of violating California's False Claims Act and various state securities laws by misrepresenting the risks involved in complex investments, which caused the California Public Employees' Retirement System (CalPERS) and the California State Teachers Retirement System to lose hundreds of millions of dollars.

“Morgan Stanley’s conduct in this case evidenced a culture of greed and deception that helped create a devastating economic crisis and crippled California’s budget,” said Attorney General Harris in a statement Friday.

Morgan Stanley said it intended to fight the lawsuit. “We do not believe this case has merit and intend to defend it vigorously,” the bank reportedly said Friday.

Filed in San Francisco Superior Court, the lawsuit did not specify the amount of financial loss to the two pension funds. However, previous lawsuits over the same investments had reportedly estimated a combined loss of more than $1 billion, a large part of which was borne by CalPERS.

Apart from Morgan Stanley, CalPERS has also sued other investment banks to recover its losses from a series of deals known as “structured investment vehicles,” in which a diversified portfolio of mortgages and other consumer loans were bundled together and sold to state funds. Harris has accused Morgan Stanley and other banks of hiding the fact that many of the loans were going into default, and also of encouraging credit rating agencies to award unjustifiably high ratings to attract investors.

This year, both Standard & Poor’s and Moody’s Investors Service agreed to settle claims in California for a combined $255 million.