CHICAGO — E-Trade Financial, the online brokerage whose shares have fallen 94 percent in four years, responded to its biggest owner’s request to address those “catastrophic losses” by hiring Morgan Stanley to explore a sale of the company. The stock rallied.
Citadel, Ken Griffin’s Chicago-based hedge fund, asked E-Trade on July 20 to arrange a meeting for shareholders to vote on items such as hiring an investment banker and removing two directors. While New York-based E-Trade rejected a meeting, the board decided to retain Morgan Stanley for advice on “strategic alternatives,” according to a statement Friday.
Trading of call options giving the right to buy E-Trade shares has exceeded 20,000 contracts for three straight days, a first for the company, according to data compiled by Bloomberg. Investors are betting E-Trade will be acquired, according to Steve Sosnick, equity risk manager at Timber Hill in Greenwich, Conn.
“There is a lot of takeover speculation,” he said. Citadel “is agitating for a sale, but who’s going to buy it?”
Susan Hickey, a spokeswoman for E-Trade, declined to comment on takeover speculation.
