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E-Trade CFO and general counsel resign


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Apr 25, 8:38 PM (ET)

By JORDAN ROBERTSON

SAN JOSE, Calif. (AP) - An executive exodus from troubled online brokerage E-Trade Financial Corp. (ETFC) (ETFC) is continuing, with the chief financial officer's and general counsel's departures announced Friday as the company grapples with massive losses stemming from its hemorrhaging mortgage business.

The New York-based company said after the market closed that Chief Financial Officer Robert Simmons will resign on or before May 9, while General Counsel Arlen Gelbard's resignation was effective Tuesday.

The CFO slot will be filled by Matthew Audette, E-Trade's controller, while the company searches for a permanent replacement. The general counsel position will be filled on an "extended interim basis" by Russell Elmer, who served in that role for six years before leaving the company last year.

The company did not detail the reasons behind either executive's departure.


The resignations come just four months after Chief Executive Mitchell Caplan was forced out as Wall Street drove the company's stock down from around $25 a share in the summer of 2007 near $2 a share this year, while E-Trade teetered on the verge of bankruptcy.

Caplan left with $10.9 million in severance pay under the terms of his employment contract and was replaced on an interim basis by Chief Operating Officer R. Jarrett Lilien, who also has submitted his resignation.

The company's proxy filing from April 16 says Lilien's resignation will be effective on or before May 16.

Turmoil in the credit and real estate markets have hammered at E-Trade's finances, triggering huge losses, including $1.7 billion in the fourth quarter last year, and forcing the company to take a $2.55 billion cash infusion in November from hedge fund Citadel Investment Group to stay afloat amid chatter the company would be sold off or broken apart.

But there are signs the company is turning a corner, reining in the losses in its troubled mortgage portfolio despite ongoing distress in the housing market, and strengthening its core stock brokering business. It added 62,000 accounts in the first three months of the year, bringing its total to 4.8 million.

E-Trade shares rose 21 cents, or 5.5 percent, to close at $4 per share before the departures were announced. The stock fell 5 cents in after-hours trading Friday.