Etrade Potential Bankruptcy?
 

November 12, 2007

This is a challenging time for the financial services industry. Bad news in the credit, housing, and stock markets continues to dominate and E*TRADE is not immune to these market conditions.

However, you, our customers, should know that we continue to be well capitalized by regulatory standards. As a matter of fact, we could absorb an immediate write down in excess of $1 billion and still remain well capitalized. Nobody knows for certain what the ultimate impact will be from these markets, but it is our expectation that news in the market will get worse before it gets better and, armed with these expectations, we are taking prudent measures to effectively manage the company's balance sheet.

We will continue to earn your confidence, providing state-of-the-art asset protection, including E*TRADE's Complete Protection Guarantee, SIPC Protection for E*TRADE Securities customers and FDIC Insurance for E*TRADE Bank customers.


We appreciate the opportunity to continue to serve you and your investing needs.


Are my stock holdings insured/protected or is it possible that I will lose these holdings if they go bankrupt?

Re: Etrade Potential Bankruptcy?
 

I think it is possible you could lose your stock holdings. As far as Etrade's bankruptcy potential, this is what one analyst is saying..
"Citi Investment Research analyst Prashant Bhatia cut E-Trade's rating to "Sell" from "Hold." Bhatia said there is a 15 percent chance E-Trade will have to declare bankruptcy and the company may be forced to sell loans and securities at a significant discount."

Etrade's stock looks to be down 50%, good time to buy or too risky?

Re: Etrade Potential Bankruptcy?
 

SIPC standard insurance is 500,000 with a 100,000 sub-limit for cash for your brokerage account. I would guess that ETrade has an Excess SIPC insurance that would insure your account even further.

Re: Etrade Potential Bankruptcy?
 

In a bankruptcy, all assets are locked until they sort things out. This means you cannot but or sell until then, whenver that actually is.

That's regarding your positions. Regarding your cash, don't expect the SIPC to "protect" you. If ETRADE is in trouble, who else do you think might be? Do you suppose others like ETRADE have an derivative exposure?

In that scenario, the SIPC can't give you cash, so they give you some kind of illiquid US bond issue, or similiar.

The complexity of derivative exposure is explained here, and in only a few other places:

www.jsmineset.com

Re: Etrade Potential Bankruptcy?
 

The website says that I only have $58 available for withdrawal. Might that be because I sold stocks on Friday? How many days after you sell a stock are the proceeds usually available for withdrawal?

Re: Etrade Potential Bankruptcy?
 

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The website says that I only have $58 available for withdrawal. Might that be because I sold stocks on Friday? How many days after you sell a stock are the proceeds usually available for withdrawal?

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do you not have margin? In a cash account, it's 3 settlement days before you can withdraw. Keep in mind that today isn't a settlement day, because it is a bank holiday. So if you sold on Friday, funds aren't available to withdraw until this Thurs.

Re: Etrade Potential Bankruptcy?
 

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SIPC standard insurance is 500,000 with a 100,000 sub-limit for cash for your brokerage account. I would guess that ETrade has an Excess SIPC insurance that would insure your account even further.

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Sounds correct^^^

But as to E-Trade declaring BR...your stocks are held in a clearing house,unless they self-clear,and they are required to insure anyway under SEC/NASD rules

Many small brokers have gone under/bankrupt with many investors in a panic over their holdings.Until they find another BD to deal with it is DEF. a hassle.

Most B/Ds have separate clearing houses,where your stocks are held in street name,and even if the BD falters....your stock holdings are insured and SAFE until they find a new BD home [img]/images/graemlins/smile.gif[/img]

It can be a pain in the Azzz to gain access to them,move them to another company,esp if a stock is falling and you want to sell

It is similar to an ACAT transfer...which is when you transfer your existing holdings/portfolio from one broker to another.It usually takes about a week or so....but you cant sell any holdings until the receiving BD takes control of the account.Again it sucks if your stocks are affected in an up/down/volitile market for that matter during this wait,and esp during a market like this one

E-Trade declaring bankruprtcy,has NOTHING to do with your holdings...their comments regarding liquidating securities most likely means THEIR OWN holdings

Find out from E-Trade who they clear through...and we can go from there? But RELAX!

Stephen [img]/images/graemlins/cool.gif[/img]

****All B/D's have a minumum net capital requiremnt based on their size,that they are required to maintain....periodic statements/disclosures regarding these financial details are required as well.

I would believe with E-Trade being one of biggest on-line firms...not only will they be OK...any # the big firms would jump at a cheap opp. to service your accounts if they had to sell/merge the company

Re: Etrade Potential Bankruptcy?
 

http://www.cipf.ca/c_home.htm

for etrade canada, they are members and here are the conditions

Re: Etrade Potential Bankruptcy?
 

I believe Etrade clears through ADP.

Re: Etrade Potential Bankruptcy?
 

[ QUOTE ]
I believe Etrade clears through ADP.

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I dont use E-Trade and just did a quick search...but it looks like they might have a self-clearing arm to their firm?:

E Trade Clearing, LLC

If anybody has an account with ET,...see if you can make a call and ask directly?
Either way ...they should be insured.

SF [img]/images/graemlins/cool.gif[/img]

Re: Etrade Potential Bankruptcy?
 

lol at people thinking they'd lose their stocks if e-trade went heads up.

Re: Etrade Potential Bankruptcy?
 

[ QUOTE ]
lol at people thinking they'd lose their stocks if e-trade went heads up.

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Art,
Now you see why I try and keep my responses simple?
[img]/images/graemlins/smirk.gif[/img]

Re: Etrade Potential Bankruptcy?
 

Well, I just rolled the dice and got in at 3.60.
I think it's way oversold.

Re: Etrade Potential Bankruptcy?
 

might go bankrupt when they have to mark to market on the 15th of november. Apparently they have a 47 billion dollar mortage portfolio and 4.1 billion in equity.

Re: Etrade Potential Bankruptcy?
 

[ QUOTE ]
might go bankrupt when they have to mark to market on the 15th of november. Apparently they have a 47 billion dollar mortage portfolio and 4.1 billion in equity.

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If that were true wouldn't the probability of them going bankrupt be 100% rather than 15%?

Jimbo

PS: I got stopped out of my last effort at E-Trade at what seems now like a miniscule loss of 62 cents per share compared to what it is selling for now.

Re: Etrade Potential Bankruptcy?
 

well I think thats the market value of their total loan portfolio. Its not all mortgage loans and not all need to be marked down. But after reading a bit more im not so sure they will avoid bankruptcy. I want to buy them but its such a messy business now and after reading through their annual report its really hard to tell exactly what they make from their brokerage business as a stand alone entity. I think a good trade would be to buy nov 17 puts and dec 22nd calls as the 15th seems to be their do or die date and I doubt that it would be totally reflected in the market, but the nov options are all way too OOTM to trade.

Re: Etrade Potential Bankruptcy?
 

[ QUOTE ]
might go bankrupt when they have to mark to market on the 15th of november. Apparently they have a 47 billion dollar mortage portfolio and 4.1 billion in equity.

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Ahnuld,

I was just going to post this about their possible exposure to the sub-prime mess I had heard rumors about last month....its another example of corporate greed...and straying away from their core business ....esp.late in the game IMO
Amazing [img]/images/graemlins/confused.gif[/img]

SF

Re: Etrade Potential Bankruptcy?
 

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lol at people thinking they'd lose their stocks if e-trade went heads up.

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is there any chance of losing the cash in there? obv we would still have the stocks

Re: Etrade Potential Bankruptcy?
 

no, cash is protected to I believe up to 100k. If you have a huge cash position just buy a bond etf for the time being.

Re: Etrade Potential Bankruptcy?
 

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no, cash is protected to I believe up to 100k.

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so how does that process work exactly, the FDIC insurance? anyone here ever have cash in a bank that went bankrupt before?

Re: Etrade Potential Bankruptcy?
 

wow, I hadn't heard about this. We have a bunch of accounts at ETrade (brokerage, Roth, money market, CDs and a couple of regular checking). The cash positions may exceed $100K. Should I move some of it to another account to be on the safe side?

Kind of sad to see things go bad for them. I even worked on designing their first web site... Got my mortgage (not sub-prime!) through ETrade and haven't had a brick and mortar bank account for about 8 years. Not sure what I'd do if they went away.

Re: Etrade Potential Bankruptcy?
 

FDIC Faq

A blog

Forbes article

Re: Etrade Potential Bankruptcy?
 

ty. I think I'm OK for now but it may be the kick I needed to finally open that Everbank account and buy some foreign currency.

Re: Etrade Potential Bankruptcy?
 

So were Enron investors covered by SIPC or that is not the same?

Re: Etrade Potential Bankruptcy?
 

not the same at all.

Re: Etrade Potential Bankruptcy?
 

a great way to play this is to buy ameritrade. a ton of e-trade users will be switching to ameritrade after this news.

if u really have balls, buy e-trade on the speculation it will get bought out.

Re: Etrade Potential Bankruptcy?
 

[ QUOTE ]
That's regarding your positions. Regarding your cash, don't expect the SIPC to "protect" you. If ETRADE is in trouble, who else do you think might be? Do you suppose others like ETRADE have an derivative exposure?

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What a load of BS.

Re: Etrade Potential Bankruptcy?
 

[ QUOTE ]
As far as Etrade's bankruptcy potential, this is what one analyst is saying..
"Citi Investment Research analyst Prashant Bhatia cut E-Trade's rating to "Sell" from "Hold." Bhatia said there is a 15 percent chance E-Trade will have to declare bankruptcy and the company may be forced to sell loans and securities at a significant discount."

[/ QUOTE ]

LOL, if that ain't the pot calling the kettle black. Pretty nervy of Citigroup.

Re: Etrade Potential Bankruptcy?
 

[ QUOTE ]
wow, I hadn't heard about this. We have a bunch of accounts at ETrade (brokerage, Roth, money market, CDs and a couple of regular checking). The cash positions may exceed $100K. Should I move some of it to another account to be on the safe side?

Kind of sad to see things go bad for them. I even worked on designing their first web site... Got my mortgage (not sub-prime!) through ETrade and haven't had a brick and mortar bank account for about 8 years. Not sure what I'd do if they went away.

[/ QUOTE ]

Read the Etrade website. Brokerage accounts are insured up to $100k in cash in each account up to 4 or 5 accounts. Stock positions up to $500k minimum. Plus they have supplemental insurance beyond SIPC.

Unless people have very large accounts, they'll be okay.

Re: Etrade Potential Bankruptcy?
 

[ QUOTE ]
[ QUOTE ]
That's regarding your positions. Regarding your cash, don't expect the SIPC to "protect" you . If ETRADE is in trouble, who else do you think might be? Do you suppose others like ETRADE have an derivative exposure?

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What a load of BS.

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C,mon man
Where on earth do you guys get this crap from?

Your CASH is insured up to $100k per account and stocks INSURED up to $500k.
They are SAFE!!

However...if you still feel uncomfortable...move your account to another BD ...but whether ETrade goes under or not....or the time it takes to ACAT(move your account) to a new broker.....you have to wait to liquidate your securites anyway during that period.

Thats the rules!

But once again ....your CASH/Stocks are safely insured,and this is NOT ENRON....lol

Enron went BR,and their OWN stock price went to ZILCH....this is not the same comparison

Unless however you individually own E-Trade stock...then you MOST DEF. would be exposed to bankruptcy issues from that standpoint.That was the reason for the mass stampede for the doors yesterday and subsequent stock collapse

....but your other positions/holdings/cash have NOTHING to do with ET going bankrupt.

SF [img]/images/graemlins/cool.gif[/img]

Re: Etrade Potential Bankruptcy?
 

Correct me if I'm wrong but it would benefit citigroup if etrade goes bankrupt right? They obviously can't "lie" but they want to report this news in the most damning manner possible.

Re: Etrade Potential Bankruptcy?
 

Little blog post for those interested:

http://globaleconomicanalysis.blogsp...ankruptcy.html

Re: Etrade Potential Bankruptcy?
 

just to clarify for people, pig4bill and SN are right and you should be protected for the most part. If, for some reason, you have a huge cash position over 100k buy something safe. If bankruptcy occurs im pretty sure theyll cover all the cash anyways, even over 100k, but it cant hurt to buy a AAA bond ETF in the mean time.

Re: Etrade Potential Bankruptcy?
 

[ QUOTE ]
Little blog post for those interested:

http://globaleconomicanalysis.blogsp...ankruptcy.html

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You gotta love these WS ANALysts:

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[/ QUOTE ] He cut his price target to $7.50 from $13, while Banc of America analyst Michael Hecht reduced his target by $1.50 to $10.50, citing diminished earnings visibility. Hecht maintained his "neutral" rating on the stock.

My comment: You have to love this. Citigroup is openly discussing bankruptcy and putting a sell rating on the stock that is now trading under $4. But the price target is $7.50. Meanwhile Banc of America cuts the target to $10.50 while remaining "neutral" on the stock. What planet are these guys on? Bizarro World?

Re: Etrade Potential Bankruptcy?
 

[ QUOTE ]
Little blog post for those interested:

http://globaleconomicanalysis.blogsp...ankruptcy.html

[/ QUOTE ]

What a bunch of [censored]. This blogger is working under the assumption that everything the CITI analyst said was correct.

Here's some (sanity?) from Bloomberg:

Nov. 13 (Bloomberg) -- E*Trade Financial Corp., the online brokerage whose shares plunged 59 percent yesterday, is ``highly unlikely'' to declare bankruptcy, BMO Capital Markets said.

E*Trade shares surged the most in six years, adding 61 cents, or 17 percent, to $4.16 as of 9:48 a.m. in New York. The stock has lost 84 percent this year through yesterday, compared with an 18 percent slide for the Standard & Poor's 500 Financials Index.

``Management has stated that the company could absorb $1 billion in writedowns and still maintain well-capitalized status,'' analyst Michael Vinciquerra wrote in a note. ``The company also indicated to us that it is spending a great deal of time looking for ways to cap or lay off its potential losses.''

``Withdrawals would have to be massive for the company to have major issues,'' Vinciquerra wrote. ``A key fact that some people seem to be ignoring is that E*Trade's deposits have actually grown for the last 13 months consecutively.''

The Atlanta-based analyst maintained the ``outperform'' rating he has had on the stock since starting coverage in April. His forecast that the New York-based brokerage will report a profit of 89 cents a share this year may be ``too optimistic based on recent commentary,'' Vinciquerra wrote. He expects profit of $1.46 a share next year.

E*Trade plunged yesterday after the third-largest online brokerage forecast a decline in fourth-quarter earnings and Citi Investment Research analyst Prashant Bhatia said the company may go bankrupt. There's a 15 percent chance the company will seek protection from creditors after management ``put the viability of the franchise at risk,'' Bhatia wrote in a note.

Vinciquerra said the company would probably be acquired before filing for bankruptcy.

``In the event that it proves necessary in a worse-case scenario, we also believe there are buyers that would find E*Trade's entire business highly attractive at a meaningful premium to current levels,'' he wrote.

BMO Capital Markets is a unit of Bank of Montreal, Canada's fourth-largest bank.

Re: Etrade Potential Bankruptcy?
 

According to reports from Bloomberg, BMO Capital analyst Michael Vinciquerra said it is "highly unlikely" that E*Trade Financial (Nasdaq: ETFC) will declare bankruptcy, as was suggested by a Citigroup analyst yesterday.

Shares of E*Trade sank 59% yesterday as investors fled after Citigroup downgraded the stock to Sell and said the company could see clients pull their money and there was a 15% chance of bankruptcy. The downgraded followed a disclosure of more mortgage and CDO exposure from the company.


Share price seems to be recovering today, think it will persist?

LC

Re: Etrade Potential Bankruptcy?
 

[ QUOTE ]

According to reports from Bloomberg, BMO Capital analyst Michael Vinciquerra said it is "highly unlikely" that E*Trade Financial (Nasdaq: ETFC) will declare bankruptcy, as was suggested by a Citigroup analyst yesterday.


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Did you read the post above you, by chance?

Apparently not.

Re: Etrade Potential Bankruptcy?
 

from what I understand they made 650 million in trading commissions last year. They have 427 million shares outstanding. If they are really cutting back on their mortgage spending, costs are either zero or that analysts earning projections are wrong. Maybe they will continue in consumer loans and banking though. The point is its very unclear from their current statements what their business will entail next year. I still think it may end the year at 10 a share but its just too risky and unclear to take a position in for me.

Re: Etrade Potential Bankruptcy?
 

ETFC has held two non-earnings related conference calls to provide additional clarity on the composition of their mortgage exposure since the first "potential bankruptcy" rumor started circlulating in August. ETFC prepared a detailed slide presentation for each call. ETFC filed those presentations with the SEC under form 8-Ks. Links below.

Here's the more recent version:

http://www.sec.gov/Archives/edgar/da...9928-index.htm

Here's the older, less relevant version:

http://www.sec.gov/Archives/edgar/da...2439-index.htm

Re: Etrade Potential Bankruptcy?
 

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if u really have balls, buy e-trade on the speculation it will get bought out.

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I got in yesterday. Up over 45%.

I love panic.