Updated to add closing share price.




Ambac Financial Group


shares stabilized Wednesday after the stock endured a round of frenzied selling in the previous session as the media and investors alike sought to make sense of significant changes in the language of the company's most recent regulatory filing.

The stock closed at 80 cents, up a penny, although it dipped as low as 64 cents in morning action, a depth unseen since mid-March. Volume of 56.8 million was more than double the issue's three-month daily average of 23 million.

The first major revelation from the Form 10-Q for the third quarter ended Sept. 30 that Ambac filed late Monday was that one of the strategies under consideration by the company to address its liquidity needs was a prepackaged bankruptcy plan. The other was that its main regulator - Wisconsin's Office of the Commissioner of Insurance, or OCI - has increased its oversight of the company's primary operating unit, Ambac Assurance Corp., and is in the process of reviewing the unit's ability to pay all the claims in its insured portfolio.

In the first instance, the reference to a prepackaged bankruptcy plan was a step beyond the usual boilerplate language featured in Securities and Exchange Commission filings about potential calamities that can strike a publicly traded company. It also represented a change from the Form 10-Q for the second quarter, when the company simply said, if various strategies didn't pan out, it "may need to consider seeking bankruptcy protection."

Ambac's stock spent most of Tuesday trading down roughly 10% with weak results from fellow bond insurer


(MBI) - Get Report

providing an overhang until around 2:00PM EST, when the volume picked up immensely and the shares spiked lower. It was around this time that media reports with headlines stating the company might file for bankruptcy protection began to appear.

The first version of the story from


on the


was published at 1:10PM EST on Tuesday. The shares ended the session down more than 30 percent at 75 cents with volume totaling nearly 110 million, its highest level since August 27.

A spokesperson for Ambac expressed frustration to


on Wednesday about the numerous stories that headlined the possibility of the bankruptcy filing but failed to note that the company included similar language in previous filings, but declined further comment about the company's current situation, referencing instead the footnote in the Form 10-Q.

A former SEC enforcement attorney speaking on background for this article viewed the disclosure of the information regarding the prepackaged plan and the heightened OCI oversight in a Form 10-Q, rather than a separate press release, as judgment calls in both cases.

The Securities and Exchange Commission was closed for Veteran's Day, and unable to comment on the situation.

-- Written by Michael Baron in New York.