“Lehman Brothers Holdings Inc. shares tumbled on Monday to their lowest level since 2000 on yet another swirl of speculation that the Wall Street firm is in trouble, including possibly having to sell itself for a bargain-basement price.

Rumors of a ‘take under’ sent Lehman (LEH) spiraling down 10% in late afternoon trade yesterday.

“It didn't help Lehman that Monday was the last day of the quarter, when fund managers typically dump their losing stocks so they don't have to disclose those egg-on-your-face positions to investors. Stocks sold for that reason often get a bounce at the start of the next quarter.”

While that may be the case, I’d argue that is far more likely that investors are just now getting really uncomfortable with the LEH’s balance sheet.

Lehman swears it doesn’t need any more funds. Banks, Lehman: Busy Lying and Raising Funds

Lehman also swears it’s been shrinking it’s balance sheet and reducing leverage. Much like Goldman Sachs, nothing but lies: Think About: Goldman Sachs Level 3

In reality, Lehman is stuck with a huge amount of toxic garbage on it’s balance sheet. To avoid the consequences, Lehman has been playing account games, moving these assets into first the Level 2 and then the Level 3 asset buckets: Bulltrap: ABCP and Level 3 Asset Bombs

Investors have caught on Lehman is now unlikely to survive. Investors have placed their bets accordingly: Lehman Put Open Interest: Just Like Bear Stearns

All support has now been broken with a close below $20. LEH is now in free fall. Customers and clients are probably getting really nervous about now… once the first few pull their funds the flood gates will open and LEH will cease to exist.