Lehman Brothers

(LEH)

is on the verge of acquiring the boutique brokerage force of

SG Cowen

, if you believe the Wall Street chatter.

While the deal wouldn't be anywhere near the $10.5 billion deal

PaineWebber

(PWJ)

got from

UBS

(UBS) - Get Report

Wednesday, it would be a significant acquisition for Lehman, which is one of the last-remaining independent investment banks.

Lehman has about 320 brokers catering to the super-rich, and it has been trying to build its sales force to catch up to premier high-net worth players

Goldman Sachs

(GS) - Get Report

,

Donaldson Lufkin & Jenrette

(DLJ)

and

Morgan Stanley Dean Witter

(MWD)

.

A Lehman spokesman declined to comment on the possibility of a deal. A Cowen spokesman didn't immediately return calls.

In the wake of the planned UBS-PaineWebber coupling, a deal could suit Lehman if it plans to remain independent. If not, a bigger sales force is also a perk for firms that want to capture a piece of the lucrative high-net worth investment market.

"There's a lot of potential in that market," says Michael Flanagan of

Financial Services Analytics

. "The traditional firms haven't come anywhere near developing that market."

Still, a handful of firms have had their presence in the business altered, according to two Wall Street firm executives. Firms such as

Alex. Brown & Sons

, now part of

Deutsche Bank

, and Cowen, owned by France's

Societe Generale

, have seen their identities dissipate under their large parent companies, which often look to develop traditional private banking businesses at the expense of nurturing the high-net-worth brokers.

Two industry executives say SocGen has been shopping the Cowen unit, and industry publication

Wall Street Letter

reported Monday that the division had been under a hiring freeze for several months.

Lehman, as an independent firm that has seen its shares climb more than 40% since June, has a strong currency to do a deal, says one executive at a rival firm. "It makes sense for them if they use the stock to do it," the executive says. "They have a $100 stock to do it with."

Lehman's stock has been unusually strong as its diversification attempts have begun to pay dividends. Acquiring Cowen "would be a very good fit," Flanagan says. "The market has been slow to realize that Lehman is delivering on its promises."

Cowen's brokers, says one Wall Street headhunter, are regarded as high-quality and average about $850,000 apiece in commissions a year for their firm.

Flanagan likes the idea of Lehman adding more brokers to make it somewhat less beholden to the twin gods of underwriting and trading. "A firm can always use more retail distribution," he says. "It's a good way for Lehman to diversify revenues."