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TheStreet Open House

The Five Dumbest Things on Wall Street This Week: Oct. 12

Stocks in this article: TSRAGEUBSJNJWFCGS

3. UBS Slush Fun

Even on the witness stand, you just can't take the BS out of UBS (UBS).

A London court heard on Monday that a UBS trader named Darren Bailey discussed the idea of a "slush account" in an electronic chat with rogue trader Kweku Adoboli months before he was busted for losing the Swiss bank $2.3 billion. However, even while confronted by his own words, Bailey rejected the claim by Adoboli's lawyer that he had knowledge of and even encouraged Adoboli's illicit activities. Adoboli was arrested in September 2011, and has pleaded not guilty to two charges of fraud and two of false accounting.

In one group chat from March 17, 2011 read aloud in court, Adoboli and Bailey discussed the week's trading activities, which Adoboli described as "emotional."

"Have you used the slush acct (account)?" asked Bailey in response at the time.

Okay. So what did Bailey -- who is still employed by UBS mind you -- say when he was confronted in court with this blast from his very own past?

"I am genuinely shocked by this. I don't know what the context to that could have been. I am genuinely surprised," replied Bailey, clearly contradicting his testimony from last Friday when he said he was unaware of any slush or umbrella account at all.

Sigh. Forget about Captain Renault being "shocked to find that gambling is going on" at Rick's Café in Casablanca. We're shocked that somebody could be so insincere -- and outright stupid -- on a witness stand.

And the silliness snowballed from there. Adoboli's defense lawyer pounced on Bailey's bad performance, labeling the comment as proof that Bailey and others at the bank were aware of Adoboli's actions, thereby legitimizing them.

Or, in other words, Adoboli's defense is that all the traders at UBS were doing it, so why is everybody picking on him?

Good question counselor. Unfortunately for your client, we have $2.3 billion answers for you.

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