UBS just settled with a hedge fund over deals its staff called “crap” and “vomit”

Investment bank UBS has settled with a a hedge fund that accused it of selling securities it knew were on the precipice of a downfall with hours to go before a potentially damaging trial for the bank was set to begin.

A source confirmed to Business Insider that UBS settled with Pursuit Partners, a Connecticut hedge fund, but declined to provide specifics.

In emails sent between bank employees, staff conducting 2007 CDO trades between UBS and hedge fund Pursuit Partners refer to securities being dealt as “crap” and “vomit,” according to court documents.

From July through August 2007, UBS sold about $US45 million in CDOs to Connecticut-based hedge fund Pursuit Partners. Initially, Pursuit Partners sought about $US100 million.

“UBS knew, at least as early as July 2007, based upon private communications by and between UBS and Moody’s, that Moody’s no longer believed that CDO notes of the type that UBS later sold to Pursuit deserved an “investment grade” rating,” the suit alleges.

But the suit also cites emails between UBS staffers that really drive the point home.

“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.

UBS did not respond to requests for comment for this story and attempts to contact Pursuit Partners employees listed in the court documents were not successful. Attempts to reach Pursuit Partners’ legal team were also unsuccessful.

NOW WATCH: Here’s the sad truth about working over 60 hours a week