Shares of Jefferies (JEF) and several regional U.S. banks dropped Thursday afternoon after two regional lenders disclosed loan-related issues tied to allegations of fraud, raising investor concerns over borrowers' creditworthiness.

On Thursday, Western Alliance (WAL) said a borrower failed“to provide collateral loans in first position,” raising fraud allegations and further unsettling markets. This came on the heels of Zions Bancorp (ZION) reporting on Wednesday that it would take a $50 million charge-off tied to commercial and industrial loans, signaling potential stress in its lending portfolio.

Jefferies' stock fell as much as 8.8%, with retail sentiment on Stocktwits in 'bearish' territory amid 'extremely high' levels of chatter. The investment bank reported earlier this week that it has“limited” exposure to First Brands, an auto parts supplier that declared bankruptcy in September.

ZION's stock was down more than 11% in afternoon trade, while WAL's stock fell nearly 10%. 

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