Caving to pressure from the Citadel, its largest shareholder, E*Trade announced proactive steps in its efforts to find a buyer for its business.  A special committee, with 3 independent advisers, was formed to assess the company's strategic options.  Their first move was to hire Goldman Sachs as an adviser.

It's a clear win for Citadel and its chief Kenneth Griffin, who have badgered E*Trade to declassify its board, axe a pair of directors and consider a sale.  The hedge fund blames E*Trade's board for letting a "phenomenal franchise" wither.

Morgan Stanley Is Out.   E*Trade had recently hired Morgan Stanley as its adviser on a possible sale, and said it would explore restructuring the board at the company's 2012 shareholder meeting.  Too little, too late for Citadel, which forced the creation of the special committee and the retention of Goldman Sachs.  Citadel apparently was dissatisfied with Morgan Stanley as an adviser because E*Trade had worked with its bankers in the past - although that had been six years earlier.   

Citadel has been appeased, for the time being.   [NYT Dealbook, 8/9/11]