Citadel scraps plan to sell E*Trade stock

Private equity firm Citadel Investment Group LLC said today that one of its affiliates has canceled a plan to sell a portion of its stake in retail brokerage firm E-Trade Financial Corp. Under a previously announced plan, Chicago-based Citadel was to have sold up to 120 million shares of E-Trade as early as Monday. Citadel owns about 1.1 billion shares in the brokerage firm. Citadel sold 13.9 million shares of the stock in a deal earlier this month. Citadel founder and CEO Ken Griffin said in a statement that ending the plan was "in the best interests of E-Trade and all of its stakeholders." E-Trade has been hit hard during the recession and credit crisis by its investments in real estate loans and bonds backed by the troubled assets. It recently completed a debt exchange as part of its ongoing effort to reduce its debt burden and bolster its capital position as it continues to face losses from soured investments. Exchanging the debt allows it to cut interest payments and fortify its ownership base. The New York-based financial firm lost $143.2 million, or 22 cents per share, during the second quarter. It also increased its provision for loan losses to $404.5 million from $319 million during the same quarter last year. Shares of E-Trade rose 6 cents, or 3.7 percent, to $1.70 in premarket trading.