eTrade 1999 Annual Report Download - page 31

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balances, the Company may be required to obtain financing for any excess debit balance. The Company had receivables from
customers, brokers, dealers and clearing organizations of $2.9 billion and payables to customers, brokers, dealers and clearing
organizations of $2.8 billion as of September 30, 1999. The Company contracts with a third-party service bureau, BETA Systems, for
its customer record keeping and data processing services.
34
The Company has experienced substantial changes in, and expansion of, its business and operations since it began offering online
investing services in 1992 and Internet investing services in February 1996, and expects to continue to experience periods of rapid
growth. The Company's past expansion has placed, and any future expansion would place, significant demands on the Company's
administrative, operational, technical, financial and other resources. Competition for highly qualified senior managers and technical
personnel is intense. If the Company fails to attract, assimilate and retain such personnel, there could be a material adverse effect on
the Company's business, financial condition and operating results.
The securities industry is subject to extensive regulation under federal, state and applicable international laws. As a result, the
Company is required to comply with many complex laws and rules and its ability to so comply is dependent in large part upon the
establishment and maintenance of a qualified compliance system. The Company is aware of several instances of its non- compliance
with applicable regulations. In particular, in fiscal 1997, the Company failed to comply with applicable advertising restrictions in one
international jurisdiction and, due to a clerical oversight, failed to timely renew its registration as a broker-dealer in two states,
Nebraska and Ohio. One of the states, Ohio, as a condition of renewing the Company's license as a broker-dealer in that state, required
the Company to offer customers resident in that state the ability to rescind (for up to 30 days) certain securities transactions effected
through the Company during the period January 1, 1997 through April 15, 1997, the date the Company's license was renewed. For
fiscal 1997, the Company recorded a $4.3 million pre-tax charge against earnings in connection with this matter.
35
Results of Operations
The following table sets forth the percentage of net revenues represented by certain items on the Company's consolidated statements of
operations for the periods indicated:
2002. EDGAR Online, Inc.