E-Trade gets slapped on the wrist - big deal

A

ak15

Co files its 10-Q filing, saying: "The SEC, in conjunction with various regional securities exchanges, is conducting an inquiry into the trading activities of certain specialist firms, including the Company's subsidiary E*TRADE Capital Markets, on various regional exchanges in order to determine whether such firms executed proprietary orders in a given security prior to a customer order in the same security (a practice commonly known as "trading ahead") during the period 1999 - 2005... On October 17, 2007, the SEC initiated an informal inquiry into matters related to the Company's loan and securities portfolios. The Company is cooperating fully with the SEC in this matter."

There is much worse going on with these a$$holes.
 
When E-trade bought Brownco from JP Morgan at top dollar in 2005 I thought for sure they were making a big mistake because Brownco's and E-trade's customer bases were very different (Brownco ave account was about 150K, E-trades much much less) and their fee structures were very different. I thought it very naive of E-trade's management to think that they would be able to hold onto Brownco's customers and tap into these larger accounts, but E-trade did make some concessions in an attempt to do so. I thought that Brownco's customers would likely be unhappy with E-trade and many would leave. In retrospect, i think that is exactly what happened, and now E-trade is not doing as well as they might have had they bought a retail broker whose customer base was better aligned. I thought of shorting E-trade after they announced the acquisition of Brownco. Had i been able to with puts deep and far enough out i might have, but if i recall correctly, i couldn't get far enough out to be satisfied.

At any rate, if E-Trade is having some problems, it wouldn't surprise me. They made, in my opinion, a really dumb business decision.
 
Quote from stock_trad3r:

Stock getting nailed AH
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damm what happen stock trader...i was going home and was listening to radio when dow was down only 80 pts... next thing @ 4 i heard dow down 220... holy moly...

150 pts in just 10 min...

bears are ruthless...:D
 
Quote from piezoe:

When E-trade bought Brownco from JP Morgan at top dollar in 2005 I thought for sure they were making a big mistake because Brownco's and E-trade's customer bases were very different (Brownco ave account was about 150K, E-trades much much less) and their fee structures were very different.

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It appears then in retrospect from the SEC allegations that when they bought the firm they started front running customer orders. It doesn't worth front running an order for 100 shares of IBM but it certainly pays front running 20,000 shares of RIMM.

Ron
 
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