E*Trade - is it safe?

C

croker

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Just heard about this *potential* problem with Etrade.
I have stock options, RSUs and cash in my Etrade account.
If it does go bankrupt, any idea what could happen to my account?
I would guess the cash is the only thing to worry about?
(maybe its a kind of Northern Rock situation of hype!)
 
Re: Etrade going bankrupt

While I understand the policy on not discussing individual shares in relation to trading in the shares, rapid downward movements in the share price of a company that is in difficult circumstances can give an indication of deeper troubles within the company (institutional investors always seem to have more knowledge of trouble ahead).

In terms of Northern Rock, the collapse in the share price was a sign that confidence in the company had been lost. This confidence was lost by people whose job it is to decide on the stability and future prospects for companies (institutional investors).

Whilst the treasury and the BoE stepped in to bail out NR, there is no likelihood that Irish or international regulatory authorities will do this for smaller companies, so the individual investor and more particularly the individual depositor is left with a risk about which they can find little reliable information.

Given the balance that is often shown in AAM postings (between different posters), many people use it as an important part of their decision making process in deciding on the level of risk they are exposed to and the possible actions open to them.

With this in mind, is it not possible to amend the policy or to show some leeway where the individual share price movement under discussion indicates serious financial troubles (rather than a trading opportunity)?

PS I am in no way expressing an opinion on the stability or otherwise of e-trade. I know nothing of the company and would leave it to others who know more to highlight the relevant details from the articles.
 
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Re: Etrade going bankrupt

Below is a statement issued on Etrade's website

To All E*TRADE Customers:

The old adage "there is no such thing as bad publicity" does not apply to E*TRADE FINANCIAL this week. Seemingly by the stroke of a pen... or a few clicks from a keyboard... a Company with a core business that has generated impressive growth quarter after quarter has been bombarded by rumored reports of its imminent demise.
Well, we want customers to know that the entire E*TRADE team has come together with resolve and commitment, taking appropriate and decisive action to manage through this issue and to ensure that E*TRADE FINANCIAL continues to deliver the best value in the marketplace for our customers.
I have spoken with scores of customers over the past week. Many of you have openly expressed your confidence in E*TRADE. It is genuinely gratifying to know that our retail customers—the heart of our business—understand the value in our model and the strength of the franchise.
Many of you have also asked me about asset protection, so to be clear—your money is safe at E*TRADE FINANCIAL. Here are the facts:

  • <LI class=Mylis>FDIC insures all E*TRADE Bank accounts to at least $100,000 and Extended Insurance Sweep Deposit Accounts to $500,000. <LI class=Mylis>SIPC protects E*TRADE Securities customers up to $500,000 (including $100,000 for claims for cash). <LI class=Mylis>Additional E*TRADE Securities protection provides up to $150 million per brokerage account, underwritten by London insurers (aggregate $600 million).
  • E*TRADE is well-capitalized by regulatory standards.
E*TRADE was founded on the concept of empowering the individual investor. This value is still at the heart of our business. We look forward to continuing to provide you with the products, pricing, service and functionality you have come to expect in order to help you manage your financial world.
We haven't lost focus on our customers, our business or our future. The credit crunch has had a tremendous impact, but we are taking appropriate and decisive action to manage through it.

Thank you for your continued business,

—Jarrett Lilien
President, COO and Director, E*TRADE FINANCIAL
 
Re: Etrade going bankrupt

Just heard about this *potential* problem with Etrade.
I have stock options, RSUs and cash in my Etrade account.
If it does go bankrupt, any idea what could happen to my account?
I would guess the cash is the only thing to worry about?
(maybe its a kind of Northern Rock situation of hype!)
Click to expand...

The OP isn't discussing share prices, they are concerned about the shares & cash he has bought through e-trade. Many employees of the American multinationals have e-trade a/cs. What would be the concensous on what they should do....get everything out or sit tight?
Will it be possible to get the funds out.
If shares are sold, will they have the and to meet the chq's?
If the shares are left with e-trade and then e-trade goes bust, will the shares still be able to be traded elsewhere?
 
etrade is it safe

i have an online etrade account in which i hold stocks. I know that etrade is actually a department of bank of america. However what happens if the bank were to get into difficulty. If the bank were to go under what is the status of my stocks are they still my property or could they be liquidated by the bank. This is also a general question with regard to online brokers what is the status of stocks held online with them if the broker was to go under
 
Re: etrade is it safe

FDIC insurance should cover you up to amounts of $100,000. However, E-trade is a goner. An estimated $5 billion in losses - far more than its equity.

http://globaleconomicanalysis.blogspot.com/2007/11/etrade-heads-for-bankruptcy.html

My advice is to set up an account with a different broker (I'm with Firstrade myself and find them very reasonable but there are loads of options) and transfer your stocks across. Most brokers will facilitate this.

No point in putting yourself through the hassle of trying to recoup your loss when E-trade files for chapter 11.
 
See below latest update from Etrade



Important News from E*TRADE

This morning we announced that E*TRADE FINANCIAL has strengthened its capital position and eliminated exposure to the types of mortgage securities that have been generating business losses, as well as headlines, over the last several months. This has been accomplished through a strategic transaction with affiliates of Citadel Investment Group.
As part of this transaction, E*TRADE has received a $2.5 billion capital infusion. This transaction, led by affiliates of Citadel, not only strengthens our capital position but also represents a significant vote of confidence from one of the world's leading investment firms. Further, Citadel has removed the entire $3 billion asset-backed securities portfolio from the Company's balance sheet, solving our most significant balance sheet issue. Citadel understands we have been faced with a challenged balance sheet, not a challenged business.
While we have remained well capitalized by regulatory standards throughout the current credit storm, we have heard the concerns raised by our customers. Today, we have taken action to address these concerns. Our goal throughout this process has been to reinforce customer confidence and to set the foundation for our future. From this point forward our customers can be assured that E*TRADE FINANCIAL has no exposure to securities such as CDOs, Alt-A or second lien asset-backed securities.
As we turn the page to a new chapter, the reasons that you have chosen E*TRADE as your financial service provider—industry leading value, innovative products and strong service–remain as true as ever, and we will continue to work hard to exceed your expectations today, tomorrow and well into the future.
We appreciate your business and continued loyalty. Thanks for sticking with us.

Jarrett Lilien
Acting Chief Executive Officer, E*TRADE FINANCIAL
 
Latest news from Etrade




TO OUR CUSTOMERS

We've never been happier to see a year come to an end or more excited to start the next. With the release today of our 2007 earnings report, we can now focus on 2008 and the progress ahead.
Why the optimism? There are several reasons:
We Have a Strong and Growing Retail Business Focused on the Customer
As detailed in our 2007 results, despite the challenges we faced in the fourth quarter, we have a strong and thriving retail business. The number of gross new US retail brokerage accounts opened during the year increased by 39% vs. the prior year and the number of gross new bank accounts increased by 80%. We continued to attract impressive numbers of new customers, and on average over 3,000 new accounts opened a day in every quarter in 20071 and the vast majority of our customers stuck with us. This is a testament to the continued strength of our brand.
We Continue to Innovate
Innovation and cutting-edge technology have always been at the heart of our culture. In 2008, we expect to introduce several exciting new products and services for our customers. You can look forward to E*TRADE Mobile Pro, a fully integrated trading and banking platform for wireless devices; a new suite of online retirement planning tools; upgrades to the E*TRADE Global Trading, Power E*TRADE Pro and E*TRADE MarketTrader platforms; and enhanced relationship management and customer service. You'll continue to enjoy free Quick Transfer, and checking and savings account yields that are among the highest in the nation. In short, in 2008, you can expect an even better experience at E*TRADE.
We Continue to Strengthen the Balance Sheet
In November, we announced a $2.5 billion cash infusion that strengthened the Company's capital position and removed $3 billion of asset-backed securities from the balance sheet. E*TRADE remains well-capitalized by regulatory standards, and we plan to end the year with nearly $1 billion in excess Bank capital. Further, we've exited our wholesale mortgage business as well as our Institutional Trading operations in the US and internationally, ensuring a strict focus on our core retail business.

Your Assets Are Well Protected
We remain steadfast in our commitment to safeguard your assets at E*TRADE (click here for details):
  • 100% Customer Securities Protection. At E*TRADE Securities, all fully-paid customer securities, including stocks and bonds, are 100% owned by the customer.
  • E*TRADE Securities is a member of SIPC which protects securities customers of its members up to $500,000 (including $100,000 for claims for cash).
  • E*TRADE Bank accounts are FDIC insured to at least $100,000.
  • E*TRADE Clearing has purchased additional protection of up to $150 million per brokerage account through its London insurers (aggregate, all customers, $600 million).
We understand that you want to make sure your assets are protected, that you receive the best possible customer service, and that you can depend on our platform. In a week like this, with significant market volatility and industry-wide high trading volumes, it's worth noting that our systems and people performed flawlessly — despite a record number of concurrent users logged onto our website. Our ability to handle these volumes is one of the reasons E*TRADE Securities has been repeatedly recognized by Keynote as the #1 Online Brokerage for Speed and Reliability.
With 2007 behind us, we are inspired to work harder than ever to demonstrate the strength and value of E*TRADE. That means reinvigorating the things that make E*TRADE unique — challenging the industry status quo with innovation, cutting-edge tools, technology, and value.
We hope you share our optimism for 2008.

Jarrett Lilien
Acting Chief Executive Officer, E*TRADE FINANCIAL
 
Latest news from Etrade


TO OUR CUSTOMERS
A MESSAGE FROM DON LAYTON

Loyal customers and dedicated employees are the bedrock of a strong company. After six weeks on the job as CEO, it is clear to me that E*TRADE has both. Thank you for your support.
Despite the continuing uncertainties our industry faces, I’m confident that we have the people and plans in place to accomplish our goals.
As we close the first quarter of the year, I want to share important information with you that I think you will find very reassuring.
The progress we have made to date is real.

  • We have strengthened our capital position, increasing excess capital at E*TRADE Bank by 60% this quarter.
  • We have enhanced our liquidity with strong cash flow, high cash reserves, and excess borrowing capacity.
  • We have further reduced undue risk in the Bank balance sheet in large part by aggressively and expertly managing our loan portfolio.
  • We are simplifying and streamlining our operations, completely focusing efforts on our core retail business.
In terms of our core retail business...

  • We are currently at an all-time record of 4.8 million E*TRADE accounts.
  • Over the last quarter, over 300,000 gross new accounts were opened.
  • Customer cash has increased by $1.3 billion in the last quarter for a total of $35 billion.
And most important, rest assured that your assets are protected at E*TRADE.

Despite our progress, we’re acutely aware that current events and continuing market volatility have created anxiety for our customers. But, again, let me reassure you that your assets are safe at E*TRADE. All fully paid-for securities are 100% owned by you, and are 100% protected. Please visit our website for more information on the four ways your assets are protected, including: SEC Customer Protection Rule, SIPC protection, FDIC insurance, and additional protection of up to $150 million per brokerage account.
I look forward to reporting more progress and more good news next quarter. We are determined to continue demonstrating to you the strength and value of E*TRADE.


Donald Layton
Chief Executive Officer
E*TRADE FINANCIAL
 
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