Citadel slashing stake in E-Trade

(Reuters) — Citadel Investment Group LLC, the hedge fund giant that injected capital into struggling brokerage E-Trade Financial Corp., said on Thursday it will slash its investment by more than two thirds over the next few months.

The Chicago-based firm plans to sell 120 million of its 166 million E-Trade shares through an insider stock-trading plan registered with the Securities and Exchange Commission. The sales will leave Citadel with just 46 million shares, or a 4.1 percent stake, when the plan concludes at the end of October.

Citadel spokeswoman Devon Spurgeon declined to comment.

The hedge fund manager intends to sell some E-Trade stock daily, under the terms of the plan, though never below the price of $1.20 a share.

Citadel founder and Chief Executive Kenneth Griffin, who was added to the E-Trade board on June 8, intends to remain. Citadel noted it will maintain significant holdings in the broker's debt and will likely emerge as E-Trade's largest stockholder even after the stock sales.

Citadel reported a 14.9 percent stake in E-Trade as of Monday.

In a filing Thursday, Citadel said it sold nearly 14 million E-Trade shares on Monday and Tuesday for $19.4 million, leaving it with 120.4 million shares.