Shares of E-Trade Financial Corp. (ETFC) added to their losses on Wednesday after the online discount brokerage said it would sell $400 million new common stock and swap $1.35 billion of debt for preferred shares.

While the move will help the beleaguered firm plug its capital holes following a government mandate, current shareholders remained discontented as their holdings would be diluted by nearly 40% through the stock sale and once more if the preferred shares are converted in future.

In a regulatory filing, E-Trade said both its capital-raising plans are being heavily backed by hedge fund giant Citadel Investment Group LLC which will buy either $50 million or $100 million shares and exchange up to $800 million in debt. Along with shoring up capital, the move would help E-Trade to eliminate interest payments related to debt.

The transaction could make Citadel a 50% owner of the New

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TheTreasury Department’s new bailout plan would require participation from private investors and would include government guarantees to limit losses. The details remain explained, but skepticism and fears of another crash are running high. For more information, read the following article from Money Morning:

By relying on asset-backed securities, large amounts of leverage and unregulated hedge funds as its key elements, the U.S. Treasury Department’s overhaul of the banking-system bailout plan is essentially relying on some of the same ingredients that caused the financial crisis in the first place.

This time around, someone should take the punch bowl away before the party even gets started. Otherwise, as Yogi Berra once said, it will be “Déjà vu all over again.”

The only difference this time around is that the U.S. Treasury Department is calling the plays.

Backdrop on a bailout

In a press conference Tuesday, U.S. Treasury Secretary Timothy …

By relying on asset-backed securities, large amounts of leverage and unregulated hedge funds as its key elements, the U.S. Treasury Department’s overhaul of the banking-system bailout plan is essentially relying on some of the same ingredients that caused the financial crisis in the first place. This time around, someone should take the punch bowl away before the party even gets started. Otherwise, as Yogi Berra once said, it will be “Déjàvu all over again.” The only difference this time around is that the U.S. Treasury Department is calling the plays. Backdrop on a Bailout In a press conference Tuesday, U.S. Treasury Secretary Timothy F. Geithner unveiled the long-awaited successor to the Bush administration’s Troubled Assets Relief Program (TARP).  The reaction was swift. Stocks plunged after the 11 a.m. press conference began when Secretary Geithner introduced a new rescue plan that was light on ...

h1 style="text-align: center;"bHedge Fund Managers/b/h1h2 style="text-align: center;"bspan class="Apple-style-span" style="color: rgb(102, 0, 0);"Hedge Fund Manager | Hedge Fund Notes/span/b/h2br /a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://4.bp.blogspot.com/_wM_OZdOMR_Y/ST1FIoBWyII/AAAAAAAACmY/OUbzph2qQfU/s1600-h/Hedge-Fund-Manager-News.jpg"img style="margin: 0pt 10px 10px 0pt; float: left; cursor: pointer; width: 104px; height: 104px;" src="http://4.bp.blogspot.com/_wM_OZdOMR_Y/ST1FIoBWyII/AAAAAAAACmY/OUbzph2qQfU/s200/Hedge-Fund-Manager-News.jpg" alt="Hedge Fund Managers News" title="Hedge Fund Managers News" id="BLOGGER_PHOTO_ID_5277450352832465026" border="0" //aOver the last 48 hours our team has updated the Hedge Fund Tracker Note profiles on 9 different hedge funds. These profiles include videos, articles, press releases and statistics which are publicly available on these funds.br /br /Here are links to these 9 updated tracker note posts:br /ullia alt="Citadel Investment Group LLC" title="Citadel Investment Group" description="Citadel Investment Group LLC ran by Kenneth Griffin" href="http://richard-wilson.blogspot.com/2008/08/citadel-investment-group-llc-kenneth.html"Citadel Investment Group LLC/a/lilia alt="Hedge Fund Blogger.com: Acorn Capital Group | Hedge Fund Tracker Notes" href="http://richard-wilson.blogspot.com/2008/12/acorn-capital-group-hedge-fund-tracker.html" title="Acorn Capital Group | Hedge Fund Tracker Notes"Acorn Capital Group/a/lilia alt="Fortress Investment Group LLC" title="Fortress Investment Group LLC" description="Fortress Investment Group LLC Hedge ...

Industry PulseHedge Fund Industry Pulse Check(http://HedgeFundBlogger.com) I was on the phone yesterday with a hedge fund investor who said he simply could not keep up with all of the news coming out on hedge funds without spending his whole work day tracking it. He wanted to know what to receive a series of updates within a single post.Here is a collection of quotes on the current state of the hedge fund industry:- Hedge-fund manager David Tepper entered the third quarter with $3.1 billion of U.S. stocks and exited with $648 million, selling most holdings to reduce risk and raise cash as carnage spread across the financial markets. “We moved a lot out early because we didn’t want to lose money,” said Tepper, 51, president of Appaloosa Management LP in Chatham, New Jersey. The firm, which switched some money ...

Sky InvestmentsSky Investments | Hedge Fund NotesOur team is still building this specific set of Hedge Fund Tracker Notes, for completed manager profiles please see our Hedge Fund Tracker Tool.Related to: Sky Investments | Hedge Fund NotesHedge Fund Tracker Tool Cerberus Capital Management LPCF Partners | Carbon Hedge Fund |Chenavari Credit Partners LP |Children's Investment Fund Management TCICitadel Investment Group LLCClarium Capital Management | Peter ThielFinancial CertificationPrime BrokersHedge Fund Software ...

Hedge Fund ConnectionThe Hedge Fund Connection | Why They WorkMark Cuban recently published a post on what is currently wrong with how hedge funds operate. In short he believes that hedge funds are not setup to benefit investors because they are paid on an annual basis where as investors are looking for long term 3, 5 and 7 year returns. to read his full post please click here.Here is a quote from the article: "Those who give money to hedge funds rarely if ever have a 1 year investment term. In fact, the contracts for investment do everything possible to lock up your money for as long as possible. vs. Hedge Fund Managers pay themselves on an annual basis.That is a huge disconnect and there in lies the rub. While it is ...

Testimony QuotesCongressional Hearing QuotesQuick Links: Hedge Fund Testimonial VideosHere are a series of quotes from yesterday's testimony.``We do not need greater regulation of hedge funds,'' said Kenneth Griffin, founder of Citadel Investment Group LLC in Chicago. ``We've not seen hedge funds as a focal point of the carnage.''Soros, founder of Soros Fund Management LLC, cautioned against ``ill-considered'' rules because this industry is reeling from market losses and client defections.``I believe our tax situation is fair,'' Paulson said. ``If your constituents, whether a plumber or a teacher, bought a stock and if they held that stock for more than a year they would pay a long-term capital gains rate.''``This isn't just about sophisticated, high-stakes investors anymore,'' Davis said. ``Institutional funds and public pensions now have a huge stake in hedge funds' ...

Citadel GroupCitadel Investment GroupJust a quick note to let you know we have updated the Hedge Fund Tracker Tool for Citadel Investment Group. You may view this updated manager profile here: Citadel Investment Group LLC.Geographical Hedge Fund Guides Include:New YorkConnecticutSwitzerlandCayman IslandsBermudaTags: Citadel Investment Group, Citadel, Citadel Hedge Fund, Citadel Hedge Funds, Citadel hedge Fund Manager

Citadel GroupCitadel Investment Group, Inc. | UpdateJust a quick note that we have just updated Citadel Investment Group's Hedge Fund Tracker Tool profile with two additional updatesView the updated profile now by clicking on this link: Citadel Investment Group LLC.Additional Reading Related to Kenneth Griffin's Citadel Group:Highland Capital Management | Hedge Fund NotesDrake Capital Management LLC | Hedge Fund NotesFarallon Capital Management Partners LPDiapason Commodities Management SA | Commodity ManagementTantallon Capital | Hedge Fund Closure NotesCerberus Capital ...