E*Trade Discloses SEC Probe

Law360, New York (March 2, 2007, 12:00 AM EST) -- E*Trade Financial Corp. said Thursday that one of its subsidiaries is under investigation for executing proprietary orders on certain securities prior to placing customer orders on the same securities.

This practice, known as “trading ahead,” allegedly took place from 1999 to 2005, according to E*Trade’s annual filing with the Securities and Exchange Commission.

“The SEC, in conjunction with various regional securities exchanges, is conducting an inquiry into the trading activities of certain specialist firms, including the company’s subsidiary E*Trade Capital Markets LLC,” E*Trade said in the...
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