Lehman Denies Fed Loan, Says Cash Holdings Rose

Lehman Brothers Holdings Inc. denied borrowing from the Federal Reserve yesterday and said the firm's cash holdings have increased, as the shares dropped to the lowest level in five years.

Lehman, the fourth-largest American securities firm, had more than $40 billion of liquid assets at the end of the quarter, up from $34 billion three months earlier, the treasurer of the New York-based firm, Paolo Tonucci, said in an e-mailed statement. The last time Lehman borrowed from the Fed was on April 16, he said.

"We did not access the primary dealer facility today," Ms. Tonucci said in response to speculation among traders that the firm had turned to the Fed for funds. The central bank set up a lending program for investment banks after the collapse of Bear Stearns Cos. in March. Lehman may seek as much as $4 billion by selling common stock, the Wall Street Journal reported yesterday, citing unidentified people with knowledge of the matter. The company has raised $8 billion since February amid asset writedowns and losses from the collapse of the U.S. subprime mortgage market. Lehman has declined 53% in New York trading this year.