Citadel Terminates E-Trade 120 Million Share Sale Plan

Readers may have been curious what some of the things the OTS told Citadel to do, while it suspended the firm's application to dominate 97.5% of E-Trade's order flow. Well, one of them apparently was to stop the proposed 120 million share sale that Citadel was hoping to do and offload some of its toxic holdings in exchange for front-running a substantial portion of retail traffic flow.

From Reuters:

Citadel Affiliate Terminates 10b5-1 Stock Trading Plan in Connection with E*TRADE Investment

Citadel Investment Group, L.L.C., a leading global financial institution,
announced today that its affiliate, Citadel Equity Fund, Ltd., has terminated
the Rule 10b5-1 trading plan it entered into on August 11, 2009 in connection
with its holdings of E*TRADE Financial Corporation (NASDAQ: ETFC) common stock.

No sale of E*TRADE common stock had been made under the Plan, which was to
commence on August 31, 2009.

The Plan provided for the sale of up to 120,000,000 shares of E*TRADE common
stock, representing slightly over 10% of Citadel`s holdings of E*TRADE common
stock on an "if and as converted" basis. Citadel owns in excess of 1.1 billion
shares of E*TRADE Common Stock on such basis, in addition to its existing debt
holdings.

Citadel believes that the termination of the Plan at this time is in the best
interests of E*TRADE and all of its stakeholders. Ken Griffin, Citadel Founder
and CEO, has consulted with E*TRADE`s Board of Directors and they have been
fully apprised of Citadel`s decision.

One always loves when Ken Griffin is so concerned about the interest of the stakeholders of the companies he provides rescue financing to only to obtain unprecedented visibility into their business model, core products and order flow. One however wonders what the true motive was for this action, and just what other requirements the OTS likely listed before they allow this retail investor "trade facilitation" to proceed as scheduled. Btw, one wonders what the update on the Citadel-Malyshev litigation is these days... Also, just who is it that runs Citadel's High Frequency Trading desk these days?

Comments

[Cognitive Dissonance]

Questions, questions and no real (meaning honest) answers to be found.

[Anonymous]

And the crap rally in crap financial stocks continues unabated....

[Anonymous]

What the heck happened that led to the dollar tanking 15 minutes ago?

[Anonymous]

Sholdn't the ots (or somebody)have a look at Fidelity brokerage services(since it is a bank I believe)and consider whether that constitute a conflict of interest since Fidelity also runs one of the biggest(if not the biggest)mutual fund operation?

[Anonymous]

Thanks for following up on this. Its a pity there is no SEC
update on HFT. Also would hate to see etrade customers be fleeced by the citadel folks - but again who cares about the small retail customer when the customer base itself is blind to the reality in the economy and is furiously buyting
stocks like there is no tomorrow !!

[FreddyInBangkok]

name this face for a barrel of beer on Sukhumvit

[url=http://img340.imageshack.us/i/1127.png/][img=http://img340.imageshack.us/img340/9476/1127.png][/url]

[FreddyInBangkok]

http://img340.imageshack.us/i/1127.png/

[Anonymous]

Citadel doesn't want to front run retail. The only people worth front running are big players. Little players orders are great if you want to make markets as long as you can make sure they are hitting/lifting your bid/offer.