eTrade 2006 Annual Report Download - page 25

When combined with the conditional order functionality already available to customers, such as trailing stops and
bracketed orders for stocks, we believe this functionality will allow our customers to better manage risk.
Move of Exchanges to the NASDAQ
On December 27, 2006 we moved the listing of the Company’s common stock from the NYSE to the
NASDAQ under the symbol ETFC. We made this move to demonstrate our commitment to our customers and
shareholders by aligning ourselves with the market that best meets their needs. As an industry innovator,
NASDAQ’s value proposition parallels our own, leveraging technology to provide customers with low fees,
superior service and fair, efficient and transparent market access and execution.
Increased Ownership of Investsmart
We increased our ownership stake in Investsmart. Investsmart is an India-based financial services
organization providing individuals and corporations with customized financial management solutions. As a
result, because we now meet the criteria required to exercise significant influence, we account for Investsmart as
an equity method investment.
Upgraded Credit Rating
Three credit agencies, Moody’s Investor Service (“Moody’s”), S&P and Dominion Bond Rating Service
(“DBRS”), upgraded our senior unsecured debt rating during 2006. During the second quarter of 2006, Moody’s
upgraded our senior unsecured debt rating from B1 to Ba2 and the long-term deposit rating of E*TRADE Bank
from Ba2 to Baa3. During the third quarter of 2006, S&P upgraded our rating to BB- (stable) from B+ (positive)
and DBRS upgraded our rating by two increments to BB (high) from BB (low). DBRS also upgraded the long-
term deposit rating of E*TRADE Bank to BBB (low) from BB. We believe that our improved profitability and
the diversity of our business model were key factors in receiving these upgrades and that these upgrades are an
important acknowledgement of the progress we have made as a company.
Significant Events in 2005
Acquisition of Harrisdirect and BrownCo
We completed our acquisitions of two online discount brokerage companies, Harrisdirect and BrownCo, in
the fourth quarter of 2005. At the time of the acquisitions, the companies had approximately $69.0 billion in
customer assets including $8.5 billion in customer cash, margin debt of approximately $0.9 billion and brokerage
receivables of approximately $3.1 billion. Harrisdirect was purchased for approximately $709 million in cash
from Harris Financial Corp, a subsidiary of BMO Financial Group. As part of the financing to acquire
Harrisdirect, we issued $450 million in fixed-rate senior notes. BrownCo was purchased for approximately
$1.6 billion in cash from JPMorgan Chase & Co. As part of the financing to acquire BrownCo, we issued
$550 million fixed-rate senior notes, $650 million in common stock and $450 million in face value of mandatory
convertible notes. The common stock was sold in the market and proceeds were used for the BrownCo
acquisition.
Acquisition of Wealth Management Advisors
We acquired two wealth management advisors, Kobren Insight Management, Inc. (“Kobren”) and Howard
Capital Management, Inc. (“Howard Capital”) during 2005. These companies provide advisory and asset
management services to retail clients. On a combined basis, these companies managed $1.5 billion in customer
assets. The growth of our wealth management business extends our ability to provide customers with the
complete support they are demanding to address their varied financial needs.
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