Lehman Brothers Holdings Inc. (fka LEHMQ)

[buhg1b]

Rumors

Lehman Bros. (LEH) slumped 9% on talk that it may see a run on the bank

Now that Wall Street has taken a deep breath and relaxed over the fate of Bear Stearns, it apparently needs to start worrying about someone else.

Shares of Lehman Bothers have been battered today by rumors of a possible Bear-like run on the bank. A spokeswoman for Lehman denied that there was anything to the rumors and the stock, which was down by 10 percent earlier, recovered a bit by mid-afternoon, trading at $39, down 8 percent.

Kerrie Cohen, a spokeswoman for Lehman Brothers, told Reuters: "There are a lot of rumors in the marketplace that are totally unfounded. We are suspicious that the rumors are being promulgated by short sellers of our stock that have an economic self interest."

Lehman, which like Bear has been a huge player in the mortgaged-backed securities business, has in recent weeks been very vocal in emphasizing that its liquidity position is much stronger than Bear's was.

Still, questions about Lehman persist. Jesse Eisinger last week gave a skeptical assessment about Lehman's balance sheet, noting that its leverage and assets rose in the first-quarter. More troubling, Eisinger said, was that the firm changed the way it defines "tangible equity" or the hard assets that it has left over after subtracting its liabilities.

To be sure, when it comes to market worries, Lehman is not the only financial firm. Shares of Merrill Lynch were down 5 percent today after analysts forecast a lost for its first-quarter.

http://www.portfolio.com/news-markets/top-5/2008/03/27/Lehman-Plagued-by-Rumors