Lehman Files for Bankruptcy

Lehman Brothers (LEH 3.65) is filing for bankruptcy.  The Wall Street Journal reported that Lehman's board authorized the filing in order to protect its assets and maximize value.  Lehman has seen its stock price plummet as skittish investors worried that the firm's health was deteriorating.

None of Lehman's broker-dealers will be included in the filing and all will continue to operate.  Current customers may continue to trade or take other actions with respect to their accounts, according to the company.

In turn, Lehman continues to explore the sale of its broker-dealer operations and is in advanced discussions with a number of potential purchasers to sell its investment management division.  Lehman's asset management business and its Neuberger Berman operation will continue to conduct business as usual and will not be subject to their parent's filing.

The Wall Street Journal also reported that the sale of Lehman's assets could be done without flooding the market and, as such, was no worse an option than selling outright.  However, such a sale would come without the help of the Fed, which prompted Barclays (BCS 25.18) and Bank of America (BAC 33.74) to walk away from a potential deal.

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