| 14 September 2009

E*TRADE Financial is still feeling the tug of a banking albatross around its neck as the Office of Thrift Supervision, E*TRADE's regulator of choice, told the firm on Monday that it must add $100 million to its balance sheet.

E*TRADE subsequently announced that it would terminate its existing stockholder rights program and float a new issue of $150 million in common stock. The offering would be issued at-the-market (ATM) with the help of investment bank Sandler O'Neill, who will also (potentially) buy some of the offering itself.

The move does much to position E*TRADE for a possible takeover. Its core brokerage business continues to do well. "Competitors Ameritrade and Schwab have both made public comments about the attractiveness of E-Trade's 2.7 million brokerage accounts," wrote an analyst, according to this MarketWatch article.

Last week we reported that E*TRADE decided to search for a new CEO and its current CEO, Donald Layton, would leave the firm at the end of this year. We also reported that E*TRADE's largest investor, Citadel Group, decided not to sell its stake in the company.