NEW YORK (Bloomberg) — Amaranth Advisors LLC asked a court to dismiss the San Diego County retirement fund's lawsuit that accused the hedge-fund firm of securities fraud related to its September collapse under $6.6 billion in losses.Amaranth defrauded clients by saying it invested in a range of assets, according to a March 29 complaint filed by the San Diego County Employees Retirement Association, or SDCERA. Greenwich, Connecticut-based Amaranth imploded after betting the wrong way on natural-gas prices.

The pension plan understood the risks of investing in its hedge funds, Amaranth said yesterday in a filing with the US District Court for the Southern District of New York in Manhattan. Investors in hedge funds knowingly "take the bad with the good," Amaranth said in the filing.

"By its own admission, SDCERA is a sophisticated investor of pension funds, who invests in hedge funds and is advised by a professional investment adviser," according to Amaranth's filing. It said the firm's fund-marketing documents spell out the risks related to its "speculative and leveraged investment strategies" in "painstaking detail."

Steven Greenblatt, a lawyer at Crowell & Moring LLP in New York representing the San Diego fund, declined to comment.