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E-Trade

Coordinates: 40°45′37″N 73°58′51″W / 40.760372°N 73.980799°W / 40.760372; -73.980799
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This article is about the financial company. For the method of trading, see electronic trading. For East Trade Street in Charlotte, see Trade Street.
E-Trade Financial Corporation
Company typePublic
IndustryFinancial services
Founded1982; 42 years ago (1982)
Palo Alto, California, U.S.
HeadquartersNew York City, New York, U.S.
Key people
Rodger Lawson
(Executive Chairman)
Karl Roessner
(CEO)
ServicesBrokerage firm
RevenueIncrease $2.366 billion (2017)
Increase $614 million (2017)
Total assetsIncrease $63.365 billion (2017)
Total equityIncrease $6.931 billion (2017)
Number of employees
3,600 (2017)
Websitewww.etrade.com
Footnotes / references
[1]

E-Trade Financial Corporation (stylized as E*TRADE) is a financial services company organized in Delaware and headquartered in New York City. The company provides services for individuals and institutions that are investing online. The company offers an electronic trading platform for the purchase and sale of financial securities including common stocks, preferred stocks, futures contracts, exchange-traded funds, options, mutual funds, and fixed income investments. It also provides margin lending, online banking, and cash management services.

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 became a public company via an initial public offering.[4]

In May 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 January 2004, 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 instead merged 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, for $1.6 billion in cash.[9] As a result, E*Trade closed its office in Rancho Cordova, California, on August 31, 2006 and terminated 500 employees.[10]

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.[11]

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 balance sheet—the $3 billion Asset-backed security (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.[12]

Post subprime reorganization

In November 2007, E*Trade revoked the brand name license from SBI E*Trade Securities in Japan.[13]

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 LLC deal.[14]

In July 2008, E*Trade sold its Canadian division to Scotiabank for CAD$444 million, as part of a program to stabilize the company.[15]

In December 2009, Robert Druskin, a former chief operating officer of Citigroup Inc. was named interim CEO and chairman.[16]

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.[17]

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.[18]

On September 12, 2016, E*Trade acquired the parent company of OptionsHouse for $725 million and Karl A. Roessner was appointed CEO.[19]

Current operations

As of December 31, 2017, the company had 3.6 million brokerage accounts and a total margin receivables balance of $9.1 billion. In 2017, the company processed 214,284 daily average revenue trades. In 2017, 63% of net revenue was from interest income, 19% of net revenue was from commissions for order execution, 15% was from fees for order flow and management services, and 3% was from other sources. The company has 30 branches. The company's primary offices are in Alpharetta, Georgia; Jersey City, New Jersey; Arlington, Virginia; Sandy, Utah; Menlo Park, California; and New York City.[1]

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.[20]

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 E*Trade baby was voiced by comedian Pete Holmes.[21] 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]

The "insufferable brat" returned the following year for Super Bowl XLVII, along with a Facebook page, updates on Twitter, and videos on YouTube.[24] 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".[25]

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.[26]

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.[27]

On March 21, 2014, the company announced the end of the E*Trade baby via a commercial which aired during March Madness.[28]

See also

References

  1. ^ a b "E-Trade Financial Corporation 2017 Form 10-K Annual Report". U.S. Securities and Exchange Commission.
  2. ^ "History of E*Trade Financial Corporation". Funding Universe. Retrieved February 19, 2017.
  3. ^ "E*Trade Financial Corporation Prospectus". E*Trade Financial. August 16, 1996. Retrieved February 4, 2018.
  4. ^ "E*Trade hits Wall Street". CNET. August 16, 1996.
  5. ^ "E*TRADE Acquires Web Street for $45 Million in Stock" (Press release). E*Trade Group. May 21, 2001 – via PRNewswire.
  6. ^ Valdmanis, Thor (January 14, 2004). "TD Waterhouse, E-Trade talk merger". USA Today.
  7. ^ Austen, Ian (June 23, 2005). "TD Waterhouse USA Is Sold to Ameritrade". The 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. Retrieved February 4, 2018.
  10. ^ "E-Trade to close Rancho Cordova office, lay off 500". Sacramento Business Journal. May 18, 2006. Retrieved July 5, 2018.
  11. ^ Thurlow, Rebecca (May 16, 2007). "ANZ Bank clears final hurdle in bid to acquire ETrade Australia". Marketwatch.
  12. ^ "E*TRADE Financial Announces $2.5 Billion Investment Led by Citadel" (Press release). E*Trade Financial. November 29, 2007 – via Securities and Exchange Commission.
  13. ^ "E*TRADE Financial and SBI E*TRADE Announce Termination of Branding Agreement in Japan" (Press release). E*Trade Financial. November 9, 2007 – via Business Wire.
  14. ^ "E*TRADE Financial Appoints Chairman Donald H. Layton Chief Executive Officer" (Press release). E*Trade Financial. March 3, 2008 – via Business Wire.
  15. ^ "Scotiabank buys E*Trade Canada". CBC News. July 14, 2008.
  16. ^ "E-Trade names director as chairman, interim CEO". San Diego Union Tribune. Associated Press. December 21, 2009.
  17. ^ "E*TRADE Financial Appoints Steven Freiberg Chief Executive Officer" (Press release). E*Trade Financial. March 22, 2010 – via Business Wire.
  18. ^ "E*TRADE Financial Appoints Paul T. Idzik Chief Executive Officer" (Press release). E*Trade Financial. January 17, 2013 – via Business Wire.
  19. ^ "E*TRADE Financial Corporation Announces Leadership Transition with Close of OptionsHouse Transaction" (Press release). E*Trade Financial. September 12, 2016 – via Business Wire.
  20. ^ Allan, Mindy (May 10, 2012). "E-Trade baby turns five". Digital Journal.
  21. ^ Steinberg, Don (2011-02-18). "The Funny People Behind the Famous Ads". Wall Street Journal. ISSN 0099-9660. Retrieved 2018-04-06.
  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. ^ Lugmayr, Luigi (January 27, 2009). "ETrade Talking Baby Super Bowl Ad is Back and on Twitter". I4U News.
  25. ^ "E*Trade's talking baby is ready to rise again". Adweek. January 27, 2009.
  26. ^ Vega, Tanzina (December 28, 2011). "E*Trade's Baby Creates the Most Online Buzz". The New York Times.
  27. ^ "E*TRADE Unveils Super Bowl® XLVII Advertisement" (Press release). E*Trade Group. February 1, 2013.
  28. ^ "E-Trade bids goodbye to its iconic baby". CNBC. Reuters. March 21, 2014.
  • Business data for E-Trade Financial Corporation:

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