E*TRADE Raising $150 Million in Capital (ETFC)

E*TRADE Financial Corporation (NASDAQ: ETFC) has just filed with the SEC to sell up to $150 million worth of common stock.  J.P.Morgan was listed as the distribution agent, and shares may either be sold directly to them or into the open market.

The shares are being sold under the existing shelf registration from April 17, 2009, and it was no secret at all that E*TRADE needed to raise capital.  What is surprising is that this is only $150 million. E*TRADE stock is up 5% pre-market at $1.78, but that is down from north of $2.50 before its recent earnings.

It had also noted with last week’s earnings, “…the Office of Thrift Supervision has advised E*TRADE to address capital requirements in the near term. The remedies include both raising new capital for E*TRADE Bank and reducing the leverage of the parent holding company.  E*TRADE said it “continues to pursue the U.S. Treasury’s TARP Capital Purchase Program” and if that is made available would likely have additional conditions that would also produce significant dilution.”

Jon C. Ogg
May 8, 2009