The SEC is focusing its rumour investigation on four tales that nearly sank Lehman Brothers (LEH) last month.
The first two rumours suggested that Pimco and SAC Capital had pulled their accounts with Lehman. Shares plunged 21% before recovering when the two firms issued denials. The third rumour had Barclays buying out Lehman for $15 per share, well below the stock’s price at the time. The fourth suggested that Lehman had to go the Fed for an emergency loan to maintain liquidity. WSJ:
Beyond the investigation into the trading of Lehman and Bear Stearns shares, the SEC also announced it was conducting “sweep” examinations of hedge funds’ and brokerage firms’ internal compliance systems to try to tamp down the spreading of rumours. It also took an emergency action July 15 to try to curb certain types of short-selling in stocks of 19 financial institutions, including Lehman. Stocks of those 19 firms have rebounded since the order went into effect last Monday.