Lehman Brothers Drops After Sacking Finance, Operating Chiefs

June 12, 2008 1:36 p.m. EST

New York, NY (AHN) - Shares of Lehman Brothers Holdings Inc. turned red after the firm reported the replacement of Chief Financial Officer Erin Callan and President Joseph Gregory as it strugged to improve its balance sheet this year.

The New York-based brokerage firm decided to shakeup the top level positions after the company reported $2.8 billion in quaterly loss amid its on-going efforts to shore up capital and speculations that the company may incur additional losses.

Callan will rejoin the company's investment banking division in a senior capacity, the nation's fourth-largest investment bank on Thursday.

Callan will be replaced by Lehman's current 44-year-old co-chief administrative officer, Ian Lowitt.

While, Chief Operating Officer Joseph Gregory left the position for the 48-year-old Herbert "Bart" McDade III, who has been the head of the firm's equities division since June 2005.

Both the changes are effective immediately, the company announced.

On Monday, Lehman Brothers confirmed that it will post its first quarterly loss and will raise fresh capital by selling stock, which shaking up the investors.

The company reported that it will raise $6 billion in a stock offering as well as post a second-quarter loss of $2.8 billion, which is the first quarterly loss since the firm went public in 1994.

It will be posting loss of $5.14 a share, compared to a gain of $1.3 billion, or $2.21 per share in the second quarter 2007. The firm will publish final figures for the quarter on June 16.

Recently, the Standard & Poor's has slashed credit ratings of Lehman Brothers down to "A" from "A+", reporting that the securities firm is likely to again writedown the value of their assets.

The securities firm along with other financial institutions has suffered after the begining of subprime crisis related to the mortgages in the summer of last year, which led to the slowdown in the credit market as well the creating a global financial slowdown in the major economies.

Shares of Lehman in New York Stock Exchange composite trading were recently rising by 20 cents or 0.8 percent to $23.95 due to over all positive sentiment in the market.

Stocks of the company, which stem a 60 percent plunge in the stock this year, have been volatile and were down during the pre-market and early trading session on Thursday.