Bear Stearns' Alan "Ace" Greenberg, a former chief executive who currently serves as chair of its executive committee, told CNBC that the liquidity rumors surrounding the company are "totally ridiculous."
"It's ridiculous, totally ridiculous," he told CNBC.
Greenberg's comments came after Bear Stearns shares had fallen more than 11 percent to their lowest the lowest in five years. Bear Stearns shares, which have since regained some lost ground, have shed nearly 30 percent since the end of January.
Bear Stearns shares appeared to be under pressure from talk about liquidity issues at the company as well as from a downgrade it received from Moody's Investors' Services.
Moody's reduced the rating on 163 tranches from 15 deals issued by Bear Stearns ALT-A Trust, with 78 downgraded tranches remaining on review for possible further downgrades.
Moody's said the downgrades are based on "higher-than-anticipated rates of delinquency, foreclosure and [repossessed foreclosures] in the underlying collateral relative to credit enhancement levels."
Also weighing on Bear Stearns' stock were negative comments on brokers from Bernstein Research, which said it would not recommend buying broker stocks at this time as they are still susceptible to further book value reduction.
-AFX contributed to this report.