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Keeping Citadel’s E*Trade Gambit a Secret

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Who really knows what Ken Griffin has up his sleeve for E*Trade Financial.

Last month, Griffin indicated that his Citadel Investment Group hedge fund gradually would sell-off about 10% of of its E*Trade stock. Then yesterday, Griffin and Citadel said, “never mind.”

Citadel offered no explanation for its sudden change of heart beyond pointing to the press release it issued on the matter.

The Citadel about face also comes a few weeks after E*Trade’s regulator put the kibosh on an application by the hedge fund’s big high-frequency powered market making unit to get its hands on most of the online broker’s customer order flow. The Office of Thrift Supervision, on Aug. 14, put the application on ice and asked Citadel and E*Trade for more information.

Did the OTS decision impact Griffin’s decision to put off the stock sale? It’s hard to know since neither Citadel nor E*Trade are talking. And the OTS is not helping matters much, either.

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