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Published August 25, 2008 at 2:57 PM
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 It's a bad time to be an investment bank, especially if you're one of the big four -- Merrill Lynch Co. Inc., Lehman Brothers Inc., Morgan Stanley Inc. and Goldman Sachs Group Inc. Investors abandoned their holdings on these companies Monday as more fallout from the subprime mortgage crisis as well as the general negative sentiment of the economy spurs a continuing backlash for these four banks.
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- Shares of Merrill Lynch [MER] are trading down following an Aug. 22 announcement of a settlement with federal and state
regulators over its role in selling risky auction-rate securities to
retail investors. The settlement calls for Merrill to buy back $10 billion to $12 billion of the securities from investors by Jan. 2 and to pay a $125 million civil fine. Merrill also was reportedly trying to renegotiate a $500 million financing deal with MetroGoldwn Mayer in the wake of its firing of CEO Paula Wagner from United Artists, a unit of MGM.
- Meanwhile, a top South Korean regulator, Jun Kwang-woo, expressed concern about state-run Korea Development Bank's interest
in buying Lehman [LEH]. Reuters reports the regulator said "KDB should be just a "cheerleader" and let local private banks pursue the deal." At the same time, rumors are swirling that a movement is growing within the company to dethrone CEO Richard Fuld.
- Finally, Morgan Stanley [MS] and Goldman [GS] are down in Monday midafternoon trading on guilt by association. No negative news has been reported on both firms, but negative investment sentiment on investment banks is most likely dragging down the pair. - Gerald Magpily
See Dealscape: Rabble Babble: Lehman Brothers rumors and reports
See Dealsape: Trouble in Hollywood, MGM could be on the block again
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