E*TRADE Financial Corporation

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E*Trade Financial Corporation
Logo etrade.gif
Founded 1982
Headquarters New York
Key People Karl A. Roessner
Employees About 3,400
Products Online stock trading, mortgages and banking services for consumers and businesses, corporate services
Website www.etrade.com

E*TRADE Financial Corporation is an online stock trading company that was a pioneer in its space. In addition to serving as a discount brokerage, it also offers financial services including mortgages and banking services for consumers and businesses, in addition to corporate services including employee stock plan administration.

Timeline

  • In 1982, inventor and entrepreneur Bill Porter developed VAX-based back-end technology that would be used to launch the E*Trade Web site. Porter and Bernard A. Newcomb founded Trade*Plus Inc. in Palo Alto, California.
  • In 1983, the company launched its first online trade over a network via CompuServe.
  • In 1991, Porter founded a new company, E*TRADE Securities, Inc., with several hundred thousand dollars of startup capital from TradePlus.
  • In 1992, E*Trade began offering online brokerage services directly to individual investors.
  • In 1996, the company launched its E*Trade.com Web site. Shares of E*Trade Group went public.
  • E*Trade acquired Telebank in early 2000, which subsequently became E*Trade Bank.
  • E*Trade joined the New York Stock Exchange in 2001 and moved its headquarters from California to New York in 2004.
  • The company acquired online brokers Harrisdirect and BrownCo in 2005.

History

  • On Oct. 9, 2014, the SEC announced an enforcement action against brokerage subsidiaries of E*TRADE Financial for improperly engaging in unregistered sales of microcap stocks on behalf of their customers. An SEC investigation found that E*TRADE Securities and E*TRADE Capital Markets sold billions of penny stock shares for customers during a four-year period while ignoring red flags that the offerings were being conducted without the proper exemption from the registration provisions of federal securities laws.[1]
  • On Jan. 8, 2008 E*Trade shares fell to their lowest level since 1996 on speculation that E*Trade may lay off employees in its mortgage business.[3]
  • In late December 2007 the company said it had launched a customer "win-back" plan as part of a wider turnaround plan.[4]
  • On Nov. 12, 2007, E*Trade said the turmoil in the housing markets and rapid devaluation of mortgage-related securities, had reduced the value of its $3.0 billion asset-backed securities portfolio. The same day, shares nearly 59 percent after a Citi Investment Research analyst said the online brokerage could face bankruptcy.[5]
  • On Nov. 29, 2007 hedge fund giant Citadel made a $2.5 billion cash infusion into E*Trade Financial. The action was made to restore brokerage client confidence in E*Trade after analyst reports sparked fears of a possible bankruptcy. The move failed to have an immediate impact on E*Trade's share price.[6] E*Trade's deal with Citadel also included an agreement to route all E*Trade's customer options and a significant portion of stock order flow through Citadel for the next three years.[7]

Key People

  • Karl A. Roessner, CEO

References

  1. SEC Charges Current and Former E*TRADE Subsidiaries With Improperly Selling Penny Stocks Through Unregistered Offerings. SEC.gov.
  2. E-Trade names Frank Petrilli as new chairman. MarketWatch.
  3. E*Trade shares hit 11-year low on layoff fears. Reuters.
  4. E*Trade says customer cash, balances total $33 bln. Reuters.
  5. E*Trade's Meltdown. Businessweek.
  6. E*Toxic Tactic. New York Post.
  7. ETrade agrees to lock up some order flow through Citadel. MarketWatch.