Sometimes legal fishing expeditions pay off.
A year ago, a Connecticut hedge fund sued UBS, contending that it knowingly sold toxic mortgage-backed securities to institutional investors but never disclosed that information.
At the time, the accusation by the fund, Pursuit Partners, seemed intriguing. But because the complaint lacked any sign that it had the beef to back up its potentially explosive claim, the litigation all but fell off the radar screen.
Now, it appears the hedge fund managers were onto something, thanks to a Connecticut state judge's decision to allow Pursuit's lawyers to get limited access to some of UBS' internal emails.
In some of the emails, the investment firm's employees describe the $35 million in collateralized debt obligations sold to Pursuit in summer 2007 as "crap" and "vomit."
At first glance, it might be easy to chalk this up as simply another case of Wall Street bankers peddling securities they privately thought were junk.