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?
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