Cityscape Financial Corp. shares have plunged more than 37% this week.

The stock closed at $6.1875 Thursday, down from $9.962 on Oct. 10.

Analysts said investors were reacting to the company's plan, disclosed Tuesday in a filing with the Securities and Exchange Commission, to offer an additional 10.5 million shares of common stock.

The move would increase Cityscape's shares outstanding by 33%, to 42.2 million shares.

The sharp price decline for Cityscape, a subprime mortgage lender based in Elmsford, N.Y., occurred on huge volume. By midday Thursday trading activity was six times the stock's average daily volume of 488,000.

Cityscape officials seemed baffled by Wall Street's reaction. "This was a very routine activity that has been taken out of context," said managing director Steven Miller. "It's not on behalf of selling shareholders."

The company did two preferred convertible stock offerings this year, totaling $100 million. It is required to have enough common shares available if those shareholders want to convert, Mr. Miller said.

But investors are apparently gun-shy. Cityscape's stock has been rocked over the past twelve months by lawsuits, rating agency downgrades, and regulatory scrutiny in the United Kingdom.

Most recently, Moody's Inves-tors Service downgraded the company's debt this week.

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