COLUMBUS, Ohio—Ohio Attorney General Richard Cordray has sued three national rating agencies, alleging they offered inflated and misleading ratings of mortgage-backed securities and damaged five public employee pension funds that invested in the securities.

The suit filed Friday alleges that Standard & Poor’s Corp., Moody’s Investors Service and Fitch Ratings made misleading evaluations of mortgage-backed securities, in part, because of the fees they received from the issuers of the securities, Mr. Cordray said in a statement.

He filed the suit on behalf of the Ohio Public Employees Retirement System, the State Teachers Retirement System of Ohio, the Ohio Police & Fire Pension Fund, the School Employees Retirement System of Ohio and the Ohio Public Employees Deferred Compensation Program. Preliminary estimates indicate the funds lost more than $457 million, Mr. Cordray said.

“Contrary to the representations of the rating agencies, these mortgage-backed securities were, in fact, high-risk investments that lost tremendous value as the housing market collapsed and mortgage foreclosures accelerated,” Mr. Cordray said in the statement.

He also cited public statements that ratings agencies executives made after the crisis.

“We believe the claim has no legal or factual merit, and we intend to defend ourselves vigorously against it,” said a spokesman for the McGraw-Hill Cos., S&P’s parent company. “A recent (Securities and Exchange Commission) examination of our business practices found no evidence that decisions about ratings methodologies or models were based on attracting or losing market share.”

Mr. Cordray said he did not think the ratings agencies could successfully invoke a First Amendment defense in this case, because the agencies helped issuers promote and sell securities at high ratings they didn’t deserve. He said his office filed the suit after doing enough work to “feel secure that we could establish a case.”

“We do think that they went well beyond offering dispassionate, neutral opinions where First Amendment defenses could have more traction and were involved in the business of packaging, offering, facilitating and promoting mortgage-backed securities for sale,” he said in a press conference. “I’m not suggesting this is an easy case, but it’s a case we think is thoroughly justified on the facts.”