E*Trade Financial Corp., the brokerage that came under pressure from its biggest shareholder to seek buyers, ousted chief executive officer Steven J. Freiberg and said its board is looking for a new leader.
The company's share price rose 6 percent to $8.50 as of 9:45 a.m. in New York. Freiberg, 55, was the company's third CEO in four years. Chairman Frank J. Petrilli will hold the post while the company seeks a permanent replacement, E*Trade said today in a statement. A board committee which includes the head of its biggest shareholder,
Citadel LLC's CEO Ken Griffin, will lead the search, the company said.
“The company recently implemented a refined business strategy, centered on strengthening the firm's financial position,” Petrilli said today in the statement. “The board believes it is an appropriate time to transition the role of CEO to a new leader to guide the company through the next phase of its evolution.”
Citadel last year called on E*Trade to hire a bank to review strategic alternatives and take immediate action to maximize shareholder value after “catastrophic losses” that had driven the shares down 97 percent since 2007. E*Trade in November rejected putting the company up for sale and Petrilli joined the board in January.
Strategic Review
E*Trade Chief Financial Officer Matthew Audette said in November that the company never contacted potential buyers as part of its strategic review. E*Trade saw “no reason to proceed down the path” of starting a sales process, he said, citing economic uncertainty and the interest-rate and credit environment in explaining why the company didn't reach out to potential suitors.
Citadel, a Chicago-based
hedge fund, invested $2.55 billion in E*Trade in November 2007 to help the company survive mortgage losses. The retail broker posted four years of losses through 2010, partly because of the subprime mortgage market collapse.
Freiberg joined E*Trade in March 2010, two weeks after the company said its preferred candidate was no longer a possibility. The executive came from
Citigroup Inc., where he had worked for three decades.
His departure comes days after Citadel sought to acquire a stake in Knight
Capital Group Inc. The trading firm rejected a last-minute, $500 million rescue-loan offer from Citadel on Aug. 5 as it worked on a competing plan from a group of investors, said two people with knowledge of the matter.
--Bloomberg News--
