Investment Bank Rumors and Shakeups Rattle Financial ETFs

Financial exchange traded funds (ETFs) are trading down today as more rumors about major players in the sector surfaced.

First, Lehman Brothers (LEH) headed off buzz that they would have to sell, reports CNBC. Rumors about its condition have people wondering if there’s going to be a fire sale similar to the one that hit Bear Stearns earlier this year. If the shares continue to fall, CEO Dick Fuld might have to make a deal with a bank that has a stronger balance sheet.

Also, Swiss Bank UBS AG announced a reshuffling of its board room, its second one since the subprime crisis began, reports the Associated Press. Four of the 12 board members will step down on Oct. 2. On the news, shares fell to an all-time low.

The bank has been socked by the U.S. subprime crisis and has taken $37.4 billion in writedowns in the last 10 months.

UBS (UBS) is 6.4% of the iShares MSCI Switzerland (EWL), which is down 8.4% year-to-date.

Among the financial ETFs reeling from the continued troubles are:

• Financial Select Sector SPDR (XLF): down 30% year-to-date
• iShares Dow Jones US Broker-Dealers (IAI): down 34.6% year-to-date; Lehman is 5.4%
• Regional Bank HOLDRs (RKH): down 31.4% year-to-date