Page last updated at 06:32 GMT, Friday, 20 June 2008 07:32 UK

Shareholder sues Lehman Brothers

Lehman Brothers office
Lehman has had a tough few months

A shareholder has sued US investment bank Lehman Brothers and its senior management accusing it of misleading investors over its sub-prime exposure.

The lawsuit claims that the Wall Street bank's conduct led to a substantial financial loss for its shareholders.

Lehman Brothers has not commented on the lawsuit.

Last week, Lehman reported a quarterly loss of $2.8bn and demoted two senior executives. Its shares have fallen 60% this year on fears of more bad debts.

Chief executive Richard Fuld is one of the four defendants named in the lawsuit filed on behalf of Operative Plasterers annuity fund.

It also names Joseph Gregory and Erin Callan, who last week stepped down from their posts as chief operating officer and chief financial officer.

It accuses these individuals of misrepresenting Lehman's financial position between 13 September 2006 and 6 June 2008, which caused the firm's share price to rise.

Earlier this month, the investment bank said it would need to raise $6bn to boost its balance sheet. The announcement came a week after it denied it was facing funding problems.

Lehman's financial health has been under the microscope since the collapse of smaller rival Bear Stearns, after confidence in the bank failed and investors withdrew funds.

More lawsuits are expected against banks, which have been forced to write down millions of dollars in assets linked to the weakening credit market and US housing slump.

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