E-Trade

E-Trade Financial Corporation
Public company
Traded as NASDAQ: ETFC
S&P 500 Component
Industry Financial Services
Founded Palo Alto, California (1982)
Headquarters Time-Life Building, New York City, United States
Key people
 Rodger Lawson (Executive Chairman)
Karl Roessner (CEO)[1]
Services brokerage firm
Revenue Increase US$1.941 billion (2016)[1]
Increase US$0.552 billion (2016)[1]
Total assets Increase US$48.999 billion (2016)[1]
Total equity Increase US$6.272 billion (2016)[1]
Number of employees
 3,601 (2016)[1]
Website www.etrade.com

E-Trade Financial Corporation (stylized as E*TRADE) is a financial services company headquartered in New York City. It is an online discount stock brokerage firm for self-directed investors. Investors can buy and sell such securities as stocks, bonds, options, mutual funds, and exchange-traded funds via electronic trading platforms or by phone. E-Trade Financial also provides banking services to retail investors, such as sweep deposits and savings products.

Current operations

As of December 31, 2016, the company had 3.5 million brokerage accounts and a total margin receivables balance of $6.731 billion.[1]

In 2016, the company processed 164,134 daily average revenue trades.[1]

In 2016, 59% of net revenue was from interest income, 23% of net revenue was from and commissions for order execution, 14% was from fees for order flow and management services, and 4% was from other sources.[1]

The company has 30 branches.[1]

The company's primary offices are in Alpharetta, Georgia; Jersey City, New Jersey; Arlington, Virginia; Sandy, Utah; Menlo Park, California; and New York City.

History

In 1982, William A. Porter and Bernard A. Newcomb founded TradePlus in Palo Alto, California with $15,000 in capital. In 1991 Porter and Newcomb founded a new company, E-Trade Securities, Inc., with several hundred thousand dollars of startup capital from TradePlus. E*Trade offered its trading services via America Online and Compuserve. In 1994 its revenues neared $11 million, up from $850,000 in 1992.[2]

By June 30, 1996, the company had 73,000 customers and processed 8,000 trades per day, with quarterly revenue of $15 million.[3]

In August 16,1996, the company executed an initial public offering.[4]

In 2001, the company acquired Web Street Securities, a publicly traded online brokerage firm, for $45 million in stock. Web Street had offices in Beverly Hills, Boston, Denver, and San Francisco.[5]

In 2003, Toronto-Dominion Bank held talks to merge its TD Waterhouse discount brokerage with E*Trade, but the two sides could not come to an agreement over control of the merged entity.[6] TD Waterhouse wound up merging with Ameritrade to form TD Ameritrade.[7] After the merger, E*Trade continued talks to merge with TD Ameritrade but the two sides could not agree on price and governance rights.[8]

In August 2005, E*Trade Financial acquired Harrisdirect, formerly a discount brokerage service of Bank of Montreal. Two months later, E*Trade acquired Brown & Company (aka BrownCo), formerly a discount brokerage service of JPMorgan Chase & Co., for $1.6 billion in cash.[9]

Subprime portfolio divestiture in 2007

E*Trade Financial Center, San Francisco

In July 2007, Etrade Australia, which was a separately operated company owned 6% by E*Trade Financial, was purchased by Australian ANZ Bank for $432 million.[10]

On November 29, 2007, E-Trade announced a transaction in which Citadel LLC invested $2.5 billion in cash in exchange for the company's securitized subprime mortgages, 12.5% senior unsecured notes, and 84,687,686 shares of common stock (equal to 19.99% of the then currently outstanding shares). The transaction removed the assets with the greatest market risk from E-Trade's consolidated balance sheet—the $3 billion asset-backed securities (ABS) portfolio, including its ABS collateralized debt obligations (CDOs) and second lien securities. This resulted in a net $2.2 billion reduction in assets on the company's balance sheet. Citadel received a seat on E-Trade Financial's Board of Directors and Mitch Caplan resigned as E-Trade's CEO. Although E-Trade's management admitted that the deal was costly for the company, it removed the risk associated with the subprime investments and resulted in an infusion of $2.5 billion in cash.[11]

Post subprime reorganization

In November 2007, E*Trade revoked the brand name license from SBI E*Trade Securities in Japan.[12]

In March 2008, E*Trade named Donald Layton, formerly JPMorgan Chase vice chairman, as its new CEO. Layton had joined E*Trade's board of directors in November 2007, at the same time as the Citadel deal.[13]

In July 2008, E*Trade sold its Canadian division to Scotiabank for CAD$444 million, as part of a program to stabilize the company.[14]

In December 2009, Robert Druskin, a former chief operating officer of Citigroup Inc. was named interim CEO and chairman.[15]

On March 22, 2010, Steven Freiberg, former co-CEO of Citigroup's global consumer group and former head of the bank's credit card unit, was named as E*Trade's new CEO while Druskin continued in his role as board chairman. The company also announced it would seek shareholder approval for a 1-for-10 reverse stock split.[16]

On January 17, 2013, Paul T. Idzik was appointed CEO. Idzik had previously been Group Chief Executive of DTZ and also served ten years at Barclays bank.[17]

On September 12, 2016, E*Trade acquired the parent company of OptionsHouse for $725 million and Karl A. Roessner was appointed CEO.[18]

Advertising

"E*Trade Baby" advertising campaign

E*Trade Baby was an integrated advertising campaign that appeared in online, television, print, and social media.

The first E*Trade baby was Gregory Michael Miller, taken in March 2001.[19]

In January 2008, E*Trade debuted advertisements during the Super Bowl featuring a talking baby in front of a web cam discussing investing and finance in an adult voice.

The "insufferable brat" returned the following year for Super Bowl XLVII, along with a Facebook page, updates on Twitter, and videos on YouTube.[20] It is a 30-second "Talking Baby" advertisement. The E*Trade Baby demonstrates a "Save It" initiative that focuses on just how much money is at stake in hidden 401(k) account fees and offers a better approach: "come to E*TRADE, and Save It".[21]

The E*Trade baby was voiced by comedian Pete Holmes.

The campaign was created by Tor Myhren, then of Grey Global Group.[22] At first, Myhren had doubts if the ad campaign would work.[23]

In 2011, the baby was featured in an advertisement called “Enzo the Tailor,” in which the baby was fitted for a custom-made suit and talked about how his tailor could retire in Tuscany.[24]

In 2013, the company had over 64 million total views and over 26,000 subscribers on YouTube, more than 108,000 Facebook Baby and Corporate pages fans, and more than 17,000 Twitter followers.[25]

On March 21, 2014, the company announced the end of the E*Trade baby via a commercial which aired during March Madness.[26]

See also

References

  1. 1 2 3 4 5 6 7 8 9 10 E-Trade Financial Corporation 2016 Form 10-K Annual Report
  2. ↑ "History of E*Trade Financial Corporation – FundingUniverse". Funding Universe. Retrieved 19 February 2017.
  3. ↑ "E*TRADE FINANCIAL Corporation - Prospectus Filed Pursuant to Rule 424". August 16, 1996.
  4. ↑ E*TRADE Financial Corporation - Frequently Asked Questions
  5. ↑ "E*TRADE Acquires Web Street for $45 Million in Stock" (Press release). PRNewswire. May 21, 2001.
  6. ↑ Valdmanis, Thor (January 14, 2004). "TD Waterhouse, E-Trade talk merger". USA Today. Retrieved May 1, 2010.
  7. ↑ Austen, Ian (June 23, 2005). "TD Waterhouse USA Is Sold to Ameritrade". New York Times.
  8. ↑ Goldstein, Steve (August 22, 2007). "E-Trade and TD Ameritrade have discussed merger". Marketwatch.
  9. ↑ E-Trade to acquire BrownCo for $1.6B. San Francisco Business Times. September 30, 2005. Accessed September 12, 2007.
  10. ↑ Thurlow, Rebecca (May 16, 2007). "ANZ Bank clears final hurdle in bid to acquire ETrade Australia". Marketwatch.
  11. ↑ "E*TRADE Financial Announces $2.5 Billion Investment Led by Citadel" (Press release). Business Wire. November 29, 2007.
  12. ↑ "E*TRADE Financial and SBI E*TRADE Announce Termination of Branding Agreement in Japan" (Press release). Business Wire. November 9, 2007.
  13. ↑ "E*TRADE Financial Appoints Chairman Donald H. Layton Chief Executive Officer" (Press release). Business Wire. March 3, 2008.
  14. ↑ "Scotiabank buys E*Trade Canada". CBC News. July 14, 2008.
  15. ↑ "E*TRADE Financial Corp. Names Robert Druskin Chairman and Interim CEO" (Press release). Business Wire. December 21, 2009.
  16. ↑ "E*TRADE Financial Appoints Steven Freiberg Chief Executive Officer" (Press release). Business Wire. March 22, 2010.
  17. ↑ "E*TRADE Financial Appoints Paul T. Idzik Chief Executive Officer" (Press release). Business Wire. January 17, 2013.
  18. ↑ "E*TRADE Financial Corporation Announces Leadership Transition with Close of OptionsHouse Transaction" (Press release). Business Wire. September 12, 2016.
  19. ↑ Allan, Mindy (May 10, 2012). "E-Trade baby turns five". Digital Journal.
  20. ↑ Lugmayr, Luigi (January 27, 2009). "ETrade Talking Baby Super Bowl Ad is Back and on Twitter".
  21. ↑ "E*Trade's talking baby is ready to rise again". Adweek.blogs.com. January 27, 2009.
  22. ↑ O'Reilly, Lara (December 17, 2015). "The guy who made the E-Trade baby ads is now in charge of advertising at Apple". Business Insider.
  23. ↑ Carr, Austin (February 2, 2011). "Super Bowl Ad Stories: The eTrade Baby Was a Happy Accident". Fast Company.
  24. ↑ VEGA, TANZINA (December 28, 2011). "E*Trade’s Baby Creates the Most Online Buzz". New York Times.
  25. ↑ "E*TRADE Unveils Super Bowl® XLVII Advertisement". February 1, 2013.
  26. ↑ "E-Trade bids goodbye to its iconic baby". Reuters. CNBC. March 21, 2014.

Coordinates: 40°45′37″N 73°58′51″W / 40.760372°N 73.980799°W / 40.760372; -73.980799

Selected Companies of the NASDAQ Financial-100 index
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