No Deal For Lehman Brothers; Stock Sinks

Lehman Brothers Holdings Inc. shares plunged to a new low Tuesday on a report that talks with state-owned Korea Development Bank ended without any deal for a badly needed capital injection.

The nation's fourth-largest investment bank had hoped to secure a deal with the Korean fund before announcing third-quarter earnings on Sept. 18. Lehman is facing billions of dollars in losses from wrong-way bets on mortgage securities, and had hoped another round of capital raising would encourage investors.

Shares of Lehman dropped shortly after a Dow Jones Newswires report quoted the head of South Korea's financial regulator as saying the talks had concluded. However, it appears that report itself is being disputed.

Yoo Jae-hoon, a spokesman for South Korea's Financial Supervisory Commission, flatly denied any statement was made.

"We are not in a position at the FSC to broadcast how the deal is going," Yoo told The Associated Press when asked about the report. "That is very improper."

A spokesman for Lehman Brothers could not immediately be reached for comment, but in the past have declined to comment on similar speculation.

Lehman's stock plunged as much as 45 percent in late-morning trading, and is down more than 90 percent this year. The stock fell as low as $8 before recovering a bit to $9.89, down $4.26 or 30 percent, at midday.