Lehman Brothers Ends Talks With Korea

Lehman Brothers(LEH Quote) shares were plunging Tuesday after a report that the Korean Development Bank was backing away from talks about a capital infusion in the reeling firm.

Jun Kwang-woo, chairman of the Financial Services Commission in South Korea told Dow Jones that KDB and Lehman have ended discussions. Neither Mr. Jun nor a Lehman Brothers spokesman could immediately be reached.

Lehman Brothers continues to talk to other investors, including Nomura Securities, Bloomberg reported. Still, shares were falling 35.7% to $9.10 in recent trading.

The firm is slated to report third-quarter financial results Sept. 18.

Lehman is looking at several options to avert the kind of loss of investor and lender confidence that forced the failure of Bear Stearns , which was forced to sell itself to JPMorgan Chase(JPM Quote) earlier this year. Among those is an equity investment, a sale or spinoff of its $40 billion in troubled real estate assets and a sale of its investment management business.

Lehman's shares have been hardest hit among the four large U.S. brokerage houses since the near-failure of Bear Stearns. Like Bear, Lehman's fortunes are strongly connected to the real estate and fixed income markets, which has been at the center of the current economic crisis.

Lehman Brothers has shaken up top management several times in recent weeks, including over the weekend, when it announced leadership changes in its fixed income and international operations.