(Bloomberg News) E*Trade Financial Corp., a brokerage that came under pressure from its biggest shareholder to seek buyers, said Chief Executive Officer Steven J. Freiberg has left the company and its board is looking for a new leader.
The shares rose 3.6 percent to $8.31 in early trading. Chairman Frank J. Petrilli will serve as interim CEO while the company seeks a new leader, E*Trade said today in a statement. A board committee which includes the head of its biggest shareholder, Citadel LLC's CEO Ken Griffin, will lead the search for a new chief executive, the company said.
The brokerage hired Morgan Stanley in July 2011 to explore a sale and then replaced the bank with Goldman Sachs Group Inc. E*Trade, based in New York, initiated the review following a request by Citadel to address "catastrophic losses" that drove the shares down 97 percent since 2007. The board in November rejected putting the company up for sale.
Citadel injected $2.55 billion in cash into E*Trade that year to help the company survive mortgage losses. The retail broker posted four years of losses through 2010, partly because of the subprime mortgage market collapse in 2007.
"The company recently implemented a refined business strategy, centered on strengthening the firm's financial position," Petrilli said today in the statement. "Accordingly, the board believes it is an appropriate time to transition the role of CEO to a new leader to guide the company through the next phase of its evolution."