The nation's fourth-biggest investment bank was battered Tuesday amid reports it needs to raise up to $4 billion of capital because of steep losses linked to the ongoing credit crisis.

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NEW YORK — Lehman Brothers on Tuesday denied that it was forced to tap the Federal Reserve’s discount window to stave off cash problems, and maintains that its books remain liquid.

The nation’s fourth-biggest investment bank was battered Tuesday amid reports it needs to raise up to $4 billion of capital because of steep losses linked to the ongoing credit crisis. The securities firm is set to report its first loss later this month since splitting off from American Express in 1994.

Shares of the company tumbled 15 percent Tuesday after market rumors surfaced that it was forced to borrow from the Federal Reserve’s discount window to maintain operations. After the company’s denial of approaching the Fed, shares slipped $3.22, or 9.5 percent, to close at $30.61.

“We did not access the primary broker-dealer facility,” said Paolo Tonucci, Lehman’s treasurer. “The last time we accessed the facility was on April 16 for testing purposes. We ended the first quarter with liquidity of $34 billion and finished the second quarter with well over $40 billion.”

The Federal Reserve had no comment. The Fed doesn’t reveal the identity of borrowers — whether investment houses or commercial banks — using its emergency lending.

In a Fed report last Thursday, investment companies averaged $12.3 billion in daily borrowing for the week ending May 28, down from $14.2 billion the previous week.

Richard Bove, an analyst with Ladenburg Thalmann, said raising about $4 billion through the market would result in the issuance of 120 million new shares. He said this would dilute future results by 15 percent to 20 percent, and that caused shares to plunge on Tuesday.

“Lehman is in for a long tough period ahead. It is making too many classic mistakes,” he said. “What is shocking is that these mistakes are being made by people who should know better.”

Lehman Brothers, and other financial stocks, have led the broader market sharply lower this week as investors fear the worst might not be behind them. Standard & Poor’s on Monday cut Lehman’s credit ratings by a notch, and expects a “relatively meaningful deterioration” in second-quarter results. S&P also cut ratings on other major banks and brokerages.

Worries about Lehman’s financial position intensified on May 22 after an investment manager at Greenlight Capital hedge fund publicly criticized the company.

David Einhorn, who has short positions in the stock and would benefit if shares decline, has outlined a number of inconsistencies in Lehman’s first-quarter results. He also criticized Lehman for the way it disclosed exposure to subprime mortgage-backed securities, and demanded that the bank reduce its leverage.

Lehman Brothers continues to deny Einhorn’s claims.