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

Investment bank UBS has settled with a hedge fund that accused it of selling securities it knew were on the precipice of a downfall, just hours 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 $45 million in CDOs to Connecticut-based hedge fund Pursuit Partners. Initially, Pursuit Partners sought about $100 million from the suit.

"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."

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