Citadel slashes stake in E*Trade

Kenneth Griffin's hedge fund cuts holding from 27% to under 20%; hedgie injected $2.6B into brokerage three years ago
FEB 24, 2011
E*Trade Financial Corp. said Citadel LLC is reducing its stake to less than 20 percent three years after the hedge-fund operator injected capital to help the online brokerage avoid bankruptcy. The stock fell. The sale of 23.95 million shares through Goldman Sachs Group Inc. was priced at $16, according to data compiled by Bloomberg. Deal settlement will occur on Feb. 28, the data show. Citadel was the seller, and New York-based E*Trade won't receive any proceeds, according to a statement yesterday. The hedge fund had held 21.8 million shares and debentures convertible into stock, giving it about 27 percent ownership of E*Trade, according to a Securities and Exchange Commission filing from E*Trade on Feb. 22 and another from Citadel on Feb. 14. Kenneth Griffin, the founder of Chicago-based Citadel, joined E*Trade's board in June 2009. The money manager sold 170 million shares in April, cutting its stake from 33.2 percent. Shares of the brokerage fell 4.8 percent, the most since Aug. 11, to $15.85 at the end of trading on Thursday. E*Trade has dropped 0.9 percent this year, compared with the 1.9 percent gain by the NYSE Arca Securities Broker/Dealer Index of 11 companies. Citadel's ownership drops to 19.7 percent after the offering, Susan Hickey, a spokeswoman for E*Trade, said in an e- mail yesterday. That doesn't factor in the 3.59 million shares Goldman Sachs may acquire as underwriter, she said. Devon Spurgeon, a Citadel spokeswoman, declined to comment. E*Trade, the fourth-largest U.S. retail brokerage by client assets, reported a fourth-quarter loss of 11 cents a share last month, missing the 4-cent average profit estimate from analysts surveyed by Bloomberg. E*Trade had posted two straight quarters of net income following almost three years of losses. E*Trade got a $2.55 billion cash infusion from Citadel in November 2007 to help it weather losses from bad loans and shore up its banking unit. --Bloomberg News

Latest News

Private credit becoming 'big piece' of annuities, T. Rowe exec says
Private credit becoming 'big piece' of annuities, T. Rowe exec says

Goldman Sachs retirement survey finds 83% want guaranteed income, while the annuities providing that income increasingly hold private credit.

Zocks debuts Claude plugin with seven skills for financial advisors
Zocks debuts Claude plugin with seven skills for financial advisors

The AI meeting assistant's Advisor Intelligence plugin turns client conversation data into annual reviews, tax scans and attrition alerts.

Stifel settles massive $30 million complaint involving star broker’s sale of structured products
Stifel settles massive $30 million complaint involving star broker’s sale of structured products

Chuck Roberts and Stifel have been facing scrutiny due to sales of structured products and structured notes.

SEC floats CFP route to accredited investor status, fund rules refresh amid private market push
SEC floats CFP route to accredited investor status, fund rules refresh amid private market push

Among other updates, the proposals would let advisors to regulated funds earn performance fees and allow interval funds to offer monthly repurchases.

The Year Is 2046 and I’m a Financial Advisor 
The Year Is 2046 and I’m a Financial Advisor 

What will financial advice look like 20 years from now? Evan Vladem explores how AI may transform wealth management while reinforcing the enduring value of human guidance, trust, and empathy. 

SPONSORED In the Age of AI, Trust Becomes the Advisor's Greatest Asset

As AI makes financial information more accessible than ever, Lana Hock explains why human judgment, trust, and empathy remain the qualities clients value most in a financial advisor

SPONSORED Direct indexing webinar targets tax-loss harvesting amid market swings

Northern Trust’s Ken Lassner shows advisors how to convert volatility into after-tax portfolio gains