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Nye Lavalle
Lehman Hits Lowest Level
Since 2000 Amid Buzz
By SUSANNE CRAIG
July 1, 2008

Lehman Brothers Holdings Inc. shares tumbled on Monday to their lowest level since 2000 on yet another swirl of speculation that the Wall Street firm is in trouble, including possibly having to sell itself for a bargain-basement price.

Financial stocks were broadly lower Monday as worries lingered about blowups lurking in second-quarter results due in July. That capped a tough three months for the Dow Jones Wilshire U.S. Banks Index, which slid 26% in the quarter. The Dow Jones U.S. Investment Services Index fell 13%.

Neither a sale of the fiercely independent Lehman nor more embarrassing write-downs are looming at the firm, according to two people close to the New York company. Still, skittish traders and investors pushed the stock down by 11%, or $2.44, to $19.81 in New York Stock Exchange composite trading at 4 p.m. In after-hours trading, it rose 4.2% to $20.49.


It didn't help Lehman that Monday was the last day of the quarter, when fund managers typically dump their losing stocks so they don't have to disclose those egg-on-your-face positions to investors. Stocks sold for that reason often get a bounce at the start of the next quarter.

Lehman last fell below $20 a share eight years ago. These days, Lehman Chief Executive Officer Richard S. Fuld Jr. is trying to steady the firm and stay out of the headlines. But it will take a long time for unpleasant memories of the $2.8 billion quarterly loss, $6 billion in fresh capital and the replacements of Lehman's president and chief financial officer in June to fade.

On Monday, Mr. Fuld and Bart McDade, who succeeded Joseph M. Gregory, Mr. Fuld's lifelong friend, as his No. 2, were pitching Lehman to institutional investors in Boston. It's a tough sell. With Bear Stearns Cos.' sale to J.P. Morgan Chase & Co., Lehman now is the smallest of the major Wall Street firms. And it has more exposure to the still-troubled mortgage market than any of those rivals.

During the second quarter, Lehman stock fell 47%. It's down 70% so far this year, despite Mr. Fuld's insistence that the firm he has led as CEO since 1993 will not only survive but also prosper as an independent company. He showed no signs of backing down at his investor meetings Monday.

Write to Susanne Craig at susanne.craig@wsj.com

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