Shares in Lehman Brothers have plunged 30% on Wall Street on fears the investment banking group will not be able to raise the funds it needs to cover losses.
Lehman has been seeking ways to raise $US6 billion after sustaining credit crunch-related write-downs and losses.
The BBC reports there are fears that a potential investment from Korea Development Bank has fallen through.
Wall Street sent its stock down to $US8 on Tuesday. The bank's share price is down more than 90% this year.
Lehman is the fourth-largest investment bank in the United States. It had hoped to secure a deal with the Korean fund before announcing third-quarter earnings on 18 September.
Lehman and KDB are thought to have been in talks for two months about the prospect of the state-run Korean bank taking a stake in Lehman.
Lehman had a second-quarter loss of $US2.8 billion.
Another bank, Bear Stearns Cos, collapsed in March after its trading partners stopped doing business with it, triggering the equivalent of a bank run. Bear was subsequently acquired by JPMorgan Chase & Co.
Funding sought
The BBC reports Lehman has been linked with a number of overseas financial firms as it tries to shore up its finances.
Recent reports have suggested that Japanese brokers Nomura Holdings are considering buying a stake in Lehman.
Others from China, Qatar and Abu Dhabi have also been linked to Lehman.
The bank is also said to be meeting with potential buyers of its Neuberger Berman asset management unit to raise funds.
