E*Trade Financial Corp. dropped the most in five months after Citadel LLC, its largest shareholder, said it’s selling the rest of its equity stake in the fourth-largest online brokerage by client assets.
Shares of the broker declined 5.8 percent to $11.14 at 11:06 a.m. New York time in the biggest intraday slump since Oct. 19. Before today, the New York-based company had gained 32 percent in 2013, compared with the 9 percent advance in the Standard & Poor’s 500 Index.
Citadel, the Chicago-based hedge fund run by Ken Griffin, plans to sell its remaining equity stake, about 27.4 million shares, by March 19, according to a release yesterday from E*Trade. The hedge fund, whose 9.6 percent stake made it the biggest holder, asked E*Trade in 2011 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.
Citadel invested $2.55 billion in E*Trade in November 2007 to help the company survive mortgage losses.
While E*Trade refused to put the company up for sale last year, it ousted Chief Executive Officer Steven J. Freiberg in August and named Citadel’s Griffin to the search committee. Freiberg was replaced by former Barclays Plc executive Paul Idzik in January as the company’s fifth top executive in five years.
The sale represents about $323.9 million, based on yesterday’s closing price of $11.82 a share. E*Trade won’t get any proceeds from the sale, according to the release.