The Wall Street Journal reports that UBS has been ordered by a Connecticut judge to set-aside $35m as cover for a potential judgement for a deal involving CDO instruments that the bank's employees described in e-mails as 'crap' and 'vomit'.
Hedge fund Pursuit Partners claims that UBS sold it investment-grade debt securities in the knowledge that the tranche of debt was to be downgraded. The bank says that the judge's order is a preliminary decision, and that it is confident that it will ultimately prevail.
In the meantime, The New York Times reports that Bank of America CEO Ken Lewis has described the ongoing talks between the bank and US officials over the payment of a suitable fee for a loss-sharing deal, which was verbally struck but never used, as 'thoughtful and professional'. Edolphus Towns, Chairman of the Committee on Oversight and Government Reform, however, has accused the bank of 'stonewalling', saying in a statement that the bank 'wants to have it both ways - all the benefits of government insurance, without having to pay a dime for all of its benefits'.
And The Journal also reports that the bank has given Merrill Lynch dealmaker Andrea Orcel new responsibilities, making him executive chairman of global banking and markets. Orcel will remain based in London. The move is seen as further evidence that BofA is keen to stem the flow of Merrill executives who have been heading for the exits.
The BBC reports that Du Jun, a former senior banker at Morgan Stanley, has been found guilty of insider trading in Hong Kong. The banker purchased $11m in Citic Resources stock, even though he was on a team working for the company on the purchase of an oil field in Kazakhstan. Du Jun sold half the stock for a $4.3m profit after the deal was announced. His sentence has been delayed, but the banker faces 7 years in clink.
And Dow Jones Newswires reports that branch managers at the Morgan Stanley Smith Barney brokerage unit 'are on pins and needles right now, waiting to hear what the pecking order will be', and who will still have a job. The firm's new structure is due to be unveiled later this week.
Finally, The Financial Times reports that French investment bankers believe that President Nicholas Sarkozy is treating them as scapegoats for the financial crisis. The newspaper quotes one unnamed banker, who said: 'There is no doubt in my mind that there is a deliberate plan to direct people's anger towards the financial community and away from the government. They are clearly looking for scapegoats at which to finger-point, and trying to make themselves popular in the public eye'.