On day one of employee training, right after new hires are handed their tax forms and shown the coffee room, HR should begin hammering home a very important lesson: don’t put anything in an email you don’t want blown up to 80 point font in a courtroom. Or printed in The Wall Street Journal.
A Connecticut state court judge ordered UBS to set aside $35.5 million to fund a potential judgment in a case where hedge fund Pursuit Partners LLC alleges UBS sold it investment-grade debt securities in 2007 that UBS knew would soon be downgraded.
In the judge’s memorandum explaining his decision to have UBS set aside the funds, he quoted emails from UBS telling its employees to, “reduce cdos…no need to publicly display this, but if you are close on something, [please] close it…[thanks] for your discretion.” A UBS banker later wrote that he had “sold more crap” to Pursuit.
The emails pre-dated sales of some the relevant CDOs but were sent after UBS was allegedly aware, through conversations with Moody’s, of a potential downgrade.
This is not the final judgment, just a preliminary decision that requires UBS give a security interest in assets valuable enough to cover the judgement, and UBS said it believes it will prevail in the case.
But they would probably like to recall those emails.
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