Beleaguered Cityscape Financial Corp.'s shares dropped more than 35% Tuesday, to close at $3.47, amid a swirl of rumors including talk that it may be seeking a buyer.

Neither Cityscape nor Bear, Stearns & Co., which was said to be seeking a buyer, returned calls. More than nine million shares traded hands, representing nearly a third of the Elmsford, N.Y.-based subprime lender's market capitalization.

Additionally, eight mutual funds filed with the Securities and Exchange Commission to sell chunks of Cityscape's debt, flooding the market with more than $7.5 million worth.

Among the explanations offered for the wild trading was a rumor that Martin Brand, Cityscape's U.K. lending chief, has resigned. Another rumor was that value investor Michael Price has sold the 15% stake he bought last year.

Margin calls were another explanation. Shareholders with big stakes in a company often borrow against their shares. When a company's stock falls significantly, the collateral for their loan loses value, forcing them to sell shares to pay back their loan.

Cityscape has been besieged by regulatory problems and downgrades, and its stock has fallen from a high of $32 in January.

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