Kenneth Griffin and Citadel, his giant hedge fund manager, are pressuring E*Trade to take dramatic steps to unlock shareholder value.  In a letter on Wednesday to Steven Freiberg, E*Trade’s CEO and interim Chairman, Citadel said the board had “squandered” a “phenomenal franchise.”  Several years ago, Citadel saved E*Trade with a $2.5 billion cash infusion. The hedge fund still owns 9.8% stake in E*Trade.

Citadel highlighted a numbers of problems - including a “still weak capital position,” poor-performing stock and board “inaction," and noted:  “Since November of 2007, the board has continually failed to act in the best interest of E*Trade shareholders.  Having endured nearly four years of value destruction and lost opportunity, we believe it is time for change.”  

Since late 2007, shares of the online brokerage have fallen to less than $13 from about $50.  [C-I:  Then again, which financial firms haven't?]

Citadel Pressuring for These Changes.   Citadel is pressuring E*Trade to pursue a possible sale in the hope of unlocking shareholder value.  “We believe a sale of the company could be achieved promptly and generate significantly higher shareholder value, avoiding the risks of operating as an independent company lacking leadership and financial capabilities."

Citadel also is looking to shake up the board, and fill the empty board seats with independents “who are not tainted by the company’s past and ongoing management failures.”   [Dealbook, 7/20/11]