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UBS settles with hedge fund over 'crap' CDO case
Note to salesmen; if you’re selling crappy CDOs to hedge funds, try not to refer to them as such in your company emails, no matter how “kewl” it may be.
According to Business Insider, UBS just forked over an undisclosed amount of money to Connecticut-based Pursuit Partners over allegations that the bank sold investment-grade collaterized debt obligations to the fund without disclosing that the notes were about to be downgraded.
Apparently, Pursuit initially wanted $100 million from UBS, but brought the figure down to $35 million back in 2009, leading the Swiss bank’s legal team to say: “UBS is confident that it will prevail on the merits of the remaining claims.”
Unfortunately for them, the bankers also had a lot to say about the notes, especially in their emails:
“'Kewl', wrote UBS trader Evan Malik to Hugh Corcoran in an August 2007 email that began with the bankers talking over company email about wine purchases. ‘Sold some more crap to Pursuit.’
In another email, UBS employee Tim Goodell said to Jared Menzel that the securities were ‘vomit;’ this was in September 2007.”
The settlement came in just hours before a potentially scathing trial was about to take place.
Photo: Frits Ahlefeldt-Laurvig