Lehman Brothers fought off persistent rumors that it might be headed to a Bear Stearns-like collapse by raising $4 billion in capital on Tuesday.

The fourth-largest U.S. investment bank has taken some hard hits from its participation in the sub-prime market and may also have suffered from bogus rumors pushed by short sellers seeking to drive the bank�s shares even lower than the 43 percent down-turn the stock has suffered since the beginning of February. The Securities and Exchange Commission is investigating the possibility of such stock manipulation.

Tuesday�s stock sale may raise the number of outstanding shares of the stock by 15 percent but obviously reassured the financial community as the stock was up by 10 percent in early trading and the Dow Jones Average hit 260 by late morning. The bank itself said that the capital-raising deal was not meant so much to protect the balance sheet against more write-downs but rather to show that the market still has confidence in Lehman.

The convertible preferred securities that Lehman sold carried a dividend yield of 7.25 percent and the principal can be used to buy Lehman common stock at $49.87 per share. This is 32.49 percent higher than the stock�s closing price on Monday.

Elsewhere, UBS, the largest Swiss bank announced on Tuesday that it would write down another $19 billion which will result in a first-quarter loss of $12 billion. These losses are based largely on the bank�s involvement in the American real estate market. The bank also said it would seek to raise about $15 billion in new capital. This is the second time UBS has gone on a money hunt since the credit crisis began. UBS lost 12.6 billion francs in the fourth quarter of 2007.

UBS is segregating its American real estate related assets a separate portfolio to facilitate work-outs and separate those loans from its other profitable businesses. This portfolio might ultimately be divested.

The bank also announced that its chairman, Marcel Ospel, would step down.