Financial Winners & Losers: Lehman

Fortress Investment Group (FIG Quote) reworked a deal with Penn National Gaming (PENN Quote) Thursday, as financial stocks ticked up slightly ahead of the holiday weekend.

Fortress and private equity firm Centerbridge Partners, which had agreed in June to buy Penn for $67 a share will now instead invest in the casino operator and pay a termination fee. Penn stock had declined 44% since last June. Fortress was trading down about 1% to $11.39; Penn was up 3% to $29.45.

The NYSE Financial Sector index advanced 0.6% to 6,155.47.

Employees of Lehman Brothers (LEH Quote) were happy to hear about an unexpected midyear bonus. The beaten-down brokerage decided to award it employees with a stock bonus that supposedly represents 20% of their equity compensation. It is meant to boost morale and retain employees, although with the huge amounts of layoffs in the brokerage industry that doesn't seem to be a threat. More likely, the move is meant to increase employee ownership at a time when rumors are flying that the company might be the target of a takeover. Either way, the stock climbed 2.6% to $22.93.

Merrill Lynch (MER Quote) managed to climb as much as 2.7% after a JP Morgan analyst said he expects the brokerage to record a loss in the second quarter. The analyst maintains a neutral rating and suggested that Merrill would probably sell its stake in Bloomberg before it would sell its stake in BlackRock (BLK Quote). Merrill ended flat at $31.13.

Elsewhere, Wachovia (WB Quote) dropped 3.1% to $14.90. The bank announced that it appointed Kevin O'Connor as its chief investment officer to Wachovia Global Securities Lending, a division of the bank that handles third-party lending.