Judge orders UBS to set aside money in "crap" CDO case

The Wall Street Journal reports that UBS has been ordered by a court in Connecticut to set aside $35.5 million to cover a potential judgment against it in a case over the mis-selling of CDOs. Hedge fund Pursuit Partners is suing UBS for selling CDOs which were about to be downgraded.

The hedge fund bought tranches of the Vertical ABS CDO 2007-1, ACA ABS 2007-2 and TABS 2007-7 CDOs between July and October 2007. It claims that UBS knew the bonds were about to be downgraded and that employees of the bank called them "crap" and "vomit."