Davis Polk & Wardwell LLP is advising E*TRADE Financial Corp. (E*TRADE) on an integrated series of transactions designed to provide additional capital to E*TRADE Bank and extend the maturity and lower the interest burden on a substantial portion of the holding company’s debt. On June 18, 2009, E*TRADE sold 500,000,000 shares of common stock (including the underwriters' over-allotment option, which was exercised in full) in a registered public offering for gross proceeds of approximately $550 million. On June 22, 2009, E*TRADE commenced an exchange offer to holders of its 8% senior notes due 2011 and its 12.5% springing-lien notes due 2017. Holders of the notes are being offered new zero-coupon senior convertible debentures due 2019. More than $1.7 billion principal amount of debt will be modified if all eligible holders exchange. Affiliates of Citadel Investment Group L.L.C., E*TRADE’s largest shareholder and the owner of more than half of its outstanding debt securities, purchased $100 million of common stock in the offering and have committed to exchange up to $1.2 billion of debt. The closing of the debt exchange is subject to regulatory approvals and the vote of E*TRADE’s shareholders at a special meeting expected to be held in August 2009.

The E*TRADE Financial family of companies provides financial services including trading, investing and related banking products and services to retail investors.

The Davis Polk corporate team includes partners Daniel G. Kelly Jr., Martin A. Wellington, Julia K. Cowles, Bruce K. Dallas and Sarah K. Solum, all of the Menlo Park office, and John D. Amorosi of the New York office, associates Jeffrey Gould, Saswat Bohidar, Christopher Pan, Caroline J. Perry, Nicholas M. Janof, Zachary Patton, Sarvenaz Madi, Christopher D. Kelley, Niki Fang, all of the Menlo Park office, and summer associates Steve Valenzuela, Nicholas J. Dashman and Robert Williams, all of the Menlo Park office. Partner Rachel D. Kleinberg and associate M. Ryan LaRosa are providing tax advice. Partner Luigi L. De Ghenghi and associate Cristina Victoria Regojo of the New York office are providing financial regulatory advice. Jessica L. Talbot is the legal assistant on the transaction. Except as noted above, all members of the Davis Polk team are based in the Menlo Park office.