Calpers sued a group of ex-Lehman executives and underwriters, alleging it bought over $700 million in bonds and Lehman stock without knowing the true condition of the now-bankrupt financial company.

Calpers, the California Public Employees' Retirement System, claims former Lehman Chief Executive Richard Fuld, Jr. and his colleagues hid Lehman's exposure to mortgage-related transactions and failed to mitigate the risks of that business, according to a lawsuit filed on Monday in a San Francisco federal court.

An attorney for Fuld did not respond to a request for comment.

In addition to the ex-Lehman executives, Calpers also named as defendants several investment banks that served as underwriters on the bond offerings, including Citigroup Global Markets Inc.

We believe the claims are without merit and will defend ourselves against them, Citigroup Inc spokesman Alex Samuelson said on Tuesday.

The Lehman bankruptcy is the largest in U.S. history. Calpers, which has assets valued at roughly $228 billion, led bondholder opposition to a Lehman bankruptcy plan last year, along with hedge fund Paulson & Co.

Faced with that stance, Lehman Brothers Holdings Inc last month proposed a new plan that increased payments to the company's senior unsecured creditors, including bondholders.

The Calpers case in U.S. District Court, Northern District of California is The California Public Employees' Retirement System v. Richard S. Fuld, Jr. et al., 11-cv-0562.

(Reporting by Dan Levine; Editing by Richard Chang)