SC 13D/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 13D

(Rule 13d-101)

INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT

TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO

RULE 13d-2(a)

Under the Securities Exchange Act of 1934

(Amendment No. 23)*

E*TRADE Financial Corporation

(Name of Issuer)

Common Stock, $0.01 par value

(Title of Class of Securities)

269246104

(CUSIP Number)

John C. Nagel

Citadel LLC

131 S. Dearborn Street, 32nd Floor

Chicago, Illinois 60603

(Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications)

July 20, 2011

(Date of Event which Requires Filing of this Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box. £

Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 13d-7 for other parties to whom copies are to be sent.

*The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

CUSIP No. 269246104 Page 2 of 15 Pages

1	NAME OF REPORTING PERSON I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (ENTITIES ONLY) Citadel Limited Partnership
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP    (a) S (b) £
3	SEC USE ONLY
4	SOURCE OF FUNDS AF
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)     £
6	CITIZENSHIP OR PLACE OF ORGANIZATION Delaware
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7	SOLE VOTING POWER 0
		8	SHARED VOTING POWER 27,423,986 shares
		9	SOLE DISPOSITIVE POWER 0
		10	SHARED DISPOSITIVE POWER See Row 8 above.
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON    £ See Row 8 above.
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES    £
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 9.8 percent1
14	TYPE OF REPORTING PERSON PN, HC

1 See Item 5.

CUSIP No. 269246104 Page 3 of 15 Pages

1	NAME OF REPORTING PERSON I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (ENTITIES ONLY) Citadel LLC
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP    (a) S (b) £
3	SEC USE ONLY
4	SOURCE OF FUNDS AF
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)     £
6	CITIZENSHIP OR PLACE OF ORGANIZATION Delaware
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7	SOLE VOTING POWER 0
		8	SHARED VOTING POWER 27,423,986 shares
		9	SOLE DISPOSITIVE POWER 0
		10	SHARED DISPOSITIVE POWER See Row 8 above.
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON    £ See Row 8 above.
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES     £
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 9.8 percent2
14	TYPE OF REPORTING PERSON OO, HC

2 See Item 5.

CUSIP No. 269246104 Page 4 of 15 Pages

1	NAME OF REPORTING PERSON I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (ENTITIES ONLY) Kenneth Griffin
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP    (a) S (b) £
3	SEC USE ONLY
4	SOURCE OF FUNDS AF
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)     £
6	CITIZENSHIP OR PLACE OF ORGANIZATION United States
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7	SOLE VOTING POWER 0
		8	SHARED VOTING POWER 27,423,986 shares
		9	SOLE DISPOSITIVE POWER 0
		10	SHARED DISPOSITIVE POWER See Row 8 above.
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON     £ See Row 8 above.
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES     £
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 9.8 percent3
14	TYPE OF REPORTING PERSON IN, HC

3 See Item 5.

CUSIP No. 269246104 Page 5 of 15 Pages

1	NAME OF REPORTING PERSON I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (ENTITIES ONLY) Citadel Equity Fund Ltd.
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP    (a) S (b) £
3	SEC USE ONLY
4	SOURCE OF FUNDS WC
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)     £
6	CITIZENSHIP OR PLACE OF ORGANIZATION Cayman Islands
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7	SOLE VOTING POWER 0
		8	SHARED VOTING POWER 27,423,986 shares
		9	SOLE DISPOSITIVE POWER 0
		10	SHARED DISPOSITIVE POWER See Row 8 above.
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON     £ See Row 8 above.
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES    £
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 9.8 percent4
14	TYPE OF REPORTING PERSON CO

4 See Item 5.

CUSIP No. 269246104 Page 6 of 15 Pages

1	NAME OF REPORTING PERSON I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (ENTITIES ONLY) Citadel Securities LLC
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP    (a) S (b) £
3	SEC USE ONLY
4	SOURCE OF FUNDS WC
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)     £
6	CITIZENSHIP OR PLACE OF ORGANIZATION Delaware
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7	SOLE VOTING POWER 0
		8	SHARED VOTING POWER 27,423,986 shares
		9	SOLE DISPOSITIVE POWER 0
		10	SHARED DISPOSITIVE POWER See Row 8 above.
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON    £ See Row 8 above.
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES     £
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 9.8 percent5
14	TYPE OF REPORTING PERSON OO, BD

5 See Item 5.

CUSIP No. 269246104 Page 7 of 15 Pages

1	NAME OF REPORTING PERSON I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (ENTITIES ONLY) Citadel Derivatives Trading Ltd.
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP    (a) S (b) £
3	SEC USE ONLY
4	SOURCE OF FUNDS WC
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)  £
6	CITIZENSHIP OR PLACE OF ORGANIZATION Cayman Islands
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7	SOLE VOTING POWER 0
		8	SHARED VOTING POWER 27,423,986 shares
		9	SOLE DISPOSITIVE POWER 0
		10	SHARED DISPOSITIVE POWER See Row 8 above.
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON    £ See Row 8 above.
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES    £
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 9.8 percent6
14	TYPE OF REPORTING PERSON CO

6 See Item 5.

CUSIP No. 269246104 Page 8 of 15 Pages

1	NAME OF REPORTING PERSON I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (ENTITIES ONLY) Citadel Advisors LLC
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP    (a) S (b) £
3	SEC USE ONLY
4	SOURCE OF FUNDS AF
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)     £
6	CITIZENSHIP OR PLACE OF ORGANIZATION Delaware
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7	SOLE VOTING POWER 0
		8	SHARED VOTING POWER 27,423,986 shares
		9	SOLE DISPOSITIVE POWER 0
		10	SHARED DISPOSITIVE POWER See Row 8 above.
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON    £ See Row 8 above.
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES    £
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 9.8 percent7
14	TYPE OF REPORTING PERSON OO, HC, IA

7 See Item 5.

CUSIP No. 269246104 Page 9 of 15 Pages

1	NAME OF REPORTING PERSON I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (ENTITIES ONLY) Citadel Holdings I LP
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP    (a) S (b) £
3	SEC USE ONLY
4	SOURCE OF FUNDS AF
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)     £
6	CITIZENSHIP OR PLACE OF ORGANIZATION Delaware
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7	SOLE VOTING POWER 0
		8	SHARED VOTING POWER 27,423,986 shares
		9	SOLE DISPOSITIVE POWER 0
		10	SHARED DISPOSITIVE POWER See Row 8 above.
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON    £ See Row 8 above.
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES    £
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 9.8 percent8
14	TYPE OF REPORTING PERSON PN, HC

8 See Item 5.

CUSIP No. 269246104 Page 10 of 15 Pages

1	NAME OF REPORTING PERSON I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (ENTITIES ONLY) Citadel Holdings II LP
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP    (a) S (b) £
3	SEC USE ONLY
4	SOURCE OF FUNDS AF
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)     £
6	CITIZENSHIP OR PLACE OF ORGANIZATION Delaware
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7	SOLE VOTING POWER 0
		8	SHARED VOTING POWER 27,423,986 shares
		9	SOLE DISPOSITIVE POWER 0
		10	SHARED DISPOSITIVE POWER See Row 8 above.
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON    £ See Row 8 above.
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES    £
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 9.8 percent9
14	TYPE OF REPORTING PERSON PN, HC

9 See Item 5.

CUSIP No. 269246104 Page 11 of 15 Pages

1	NAME OF REPORTING PERSON I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (ENTITIES ONLY) Citadel Investment Group II, L.L.C.
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP    (a) S (b) £
3	SEC USE ONLY
4	SOURCE OF FUNDS AF
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)     £
6	CITIZENSHIP OR PLACE OF ORGANIZATION Delaware
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7	SOLE VOTING POWER 0
		8	SHARED VOTING POWER 27,423,986 shares
		9	SOLE DISPOSITIVE POWER 0
		10	SHARED DISPOSITIVE POWER See Row 8 above.
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON    £ See Row 8 above.
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES    £
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 9.8 percent10
14	TYPE OF REPORTING PERSON OO, HC

10 See Item 5.

CUSIP No. 269246104 Page 12 of 15 Pages

ITEM 1.  SECURITY AND ISSUER

This Amendment No. 23 amends the Schedule 13D filed on December 17, 2007 (the “Original Filing”) by Citadel Limited Partnership (“CLP”), Citadel LLC (f/k/a Citadel Investment Group, L.L.C. (“CIG” or “CLLC”)), Kenneth Griffin (“Griffin”), Citadel Equity Fund Ltd. (“CEF”), Citadel Securities LLC (f/k/a Citadel Derivatives Group LLC (“CDG” or “Citadel Securities”)), Citadel Derivatives Trading Ltd. (“CDT”), Wingate Capital Ltd. (“Wingate”), and Citadel AC Investments Ltd. (“CAC”) relating to the Common Stock, $0.01 par value, of E*TRADE Financial Corporation, as amended by Amendment No. 1 to Schedule 13D filed on January 18, 2008 (“Amendment No. 1”), Amendment No. 2 to Schedule 13D filed on February 27, 2008 (“Amendment No. 2”), Amendment No. 3 to Schedule 13D filed on March 10, 2008 (“Amendment No. 3”), Amendment No. 4 to Schedule 13D filed on April 1, 2008 (“Amendment No. 4”), Amendment No. 5 to Schedule 13D filed on April 4, 2008 (“Amendment No. 5”), Amendment No. 6 to Schedule 13D filed on May 6, 2008 (“Amendment No. 6”), Amendment No. 7 to Schedule 13D filed on May 14, 2008 (“Amendment No. 7”), Amendment No. 8 to Schedule 13D filed on May 27, 2008 (“Amendment No. 8”), Amendment No. 9 to Schedule 13D filed on June 10, 2009 (“Amendment No. 9”), Amendment No. 10 to Schedule 13D filed on June 22, 2009 (“Amendment No. 10”), Amendment No. 11 to Schedule 13D filed on August 13, 2009 (“Amendment No. 11”), Amendment No. 12 to Schedule 13D filed on August 21, 2009 (“Amendment No. 12”), Amendment No. 13 to Schedule 13D filed on August 31, 2009 (“Amendment No. 13”), Amendment No. 14 to Schedule 13D filed on September 17, 2009 (“Amendment No. 14”), Amendment No. 15 to Schedule 13D filed on September 24, 2009 (“Amendment No. 15”), Amendment No. 16 to Schedule 13D filed on September 30, 2009 (“Amendment No. 16”), Amendment No. 17 to Schedule 13D filed on October 2, 2009 (“Amendment No. 17”), Amendment No. 18 to Schedule 13D filed on October 7, 2009 (“Amendment No. 18”), Amendment No. 19 to Schedule 13D filed on October 13, 2009 (“Amendment No. 19”), Amendment No. 20 to Schedule 13D filed on April 30, 2010 (“Amendment No. 20”), Amendment No. 21 to Schedule 13D filed on February 28, 2011 (“Amendment No. 21”), and Amendment No. 22 to Schedule 13D filed on April 27, 2011 (“Amendment No. 22” and, together with the Original Filing, Amendment No. 1, Amendment No. 2, Amendment No. 3, Amendment No. 4, Amendment No. 5, Amendment No. 6, Amendment No. 7, Amendment No. 8, Amendment No. 9, Amendment No. 10, Amendment No. 11, Amendment No. 12, Amendment No. 13, Amendment No. 14, Amendment No. 15, Amendment No. 16, Amendment No. 17, Amendment No. 18, Amendment No. 19, Amendment No. 20 and Amendment No. 21, the “Prior Filing”) by CLP, CIG, Griffin, CEF, CDG, CDT, CAC, Citadel Advisors LLC (“Citadel Advisors”), Citadel Holdings I LP (“CH-I”), Citadel Holdings II LP (“CH-II”), and Citadel Investment Group II, L.L.C. (“CIG-II”). Capitalized terms not defined herein shall have the meaning given to them in the Prior Filing.

ITEM 4.  PURPOSE OF TRANSACTION

Item 4 of the Prior Filing is amended by adding the following paragraph after the end of the fourth paragraph:

On July 20, 2011, Citadel LLC transmitted a letter to Steven J. Freiberg, the Chief Executive Officer and Interim Chairman of the Issuer.  In that letter, Citadel LLC expressed its continuing and significant dissatisfaction with the financial performance of the Issuer and the management of the Issuer’s business.  Among other things, Citadel LLC urged that the Issuer call a special meeting of its shareholders in order to consider and vote on steps aimed at maximizing the value for all shareholders, including:

·    a non-binding advisory shareholder resolution that a Special Committee of the Board, comprised of Directors who have joined the Board within the past three years, promptly retain the services of a nationally-recognized investment banking firm (that has not previously advised the Company or the Board) to undertake a review of its strategic alternatives in order to maximize shareholder value, including a possible sale of the Company;

·    an amendment to the Company’s certificate of incorporation to remove the existing staggered Board provisions to give shareholders a meaningful voice in choosing the Company’s future; and

·    the removal of Michael Parks and Donna Weaver as Directors of the Company and the election of independent director replacements.

In the letter, Citadel LLC stated that if the Issuer failed to call the special meeting by July 22, 2011 then Citadel would formally request the Issuer call a meeting pursuant to Article Sixth of the Issuer’s certificate of incorporation.

CUSIP No. 269246104 Page 13 of 15 Pages

ITEM 5.  INTEREST IN SECURITIES OF THE ISSUER

Item 5 of the Prior Filing is amended and restated in its entirety as follows:

(a)	Number of shares: 27,423,986 shares
	Percentage of shares: 9.8%15
(b)	Sole power to vote or direct the vote: 0 shares
	Shared power to vote or direct the vote: 27,423,986 shares
	Sole power to dispose or to direct the disposition: 0 shares
	Shared power to dispose or direct the disposition: 27,423,986 shares
(c)	There have been no transactions effected by the Reporting Persons in the shares of Common Stock of the Issuer since the date of Amendment No. 22.
(d)	Not applicable.
(e)	Not applicable.

ITEM 7.MATERIAL TO BE FILED AS EXHIBITS

The following documents are filed as appendices and exhibits (or incorporated by reference herein):

Exhibit 99.46 July 20, 2011 letter from Citadel LLC to Stephen J. Freiberg

15 The percentages reported in this Amendment No. 23 are based upon 279,700,971 shares of Common Stock outstanding as of May 2, 2011 (as reported in the Form 10-Q filed by the Issuer on May 4, 2011).

CUSIP No. 269246104 Page 14 of 15 Pages

Signature

After reasonable inquiry and to the best of its knowledge and belief, the undersigned certify that the information set forth in this statement is true, complete and correct.

Dated this 20th day of July, 2011

CITADEL LIMITED PARTNERSHIP		CITADEL LLC
By:	Citadel LLC,	By:	/s/ John C. Nagel
	its General Partner		John C. Nagel, Authorized Signatory
By:	/s/ John C. Nagel
	John C. Nagel, Authorized Signatory
CITADEL EQUITY FUND LTD.		CITADEL DERIVATIVES TRADING LTD.
By:	Citadel Advisors LLC,	By:	Citadel Advisors LLC,
	its Portfolio Manager		its Portfolio Manager
By:	Citadel Holdings II LP, its Managing Member	By:	Citadel Holdings II LP, its Managing Member
By:	Citadel Investment Group II, L.L.C.,	By:	Citadel Investment Group II, L.L.C.,
	its General Partner		its General Partner
By:	/s/ John C. Nagel	By:	/s/ John C. Nagel
	John C. Nagel, Authorized Signatory		John C. Nagel, Authorized Signatory
KENNETH GRIFFIN		CITADEL SECURITIES LLC
By:	/s/ John C. Nagel	By:	Citadel Advisors LLC,
	John C. Nagel, attorney-in-fact*		its Managing Member
		By:	Citadel Holdings II LP, its Managing Member
		By:	Citadel Investment Group II, L.L.C.,
			its General Partner
		By:	/s/ John C. Nagel
			John C. Nagel, Authorized Signatory

 

* John C. Nagel is signing on behalf of Kenneth Griffin as attorney-in-fact pursuant to a power of attorney previously filed with the Securities and Exchange Commission on February 24, 2006, and hereby incorporated by reference herein. The power of attorney was filed as an attachment to a filing by Citadel Limited Partnership on Schedule 13G for Morgans Hotel Group Co.

CUSIP No. 269246104 Page 15 of 15 Pages

CITADEL ADVISORS LLC		CITADEL HOLDINGS I LP
By:	Citadel Holdings II LP,	By:	Citadel Investment Group II, L.L.C.,
	its Managing Member		its General Partner
By:	/s/ John C. Nagel	By:	/s/ John C. Nagel
	John C. Nagel, Authorized Signatory		John C. Nagel, Authorized Signatory
CITADEL HOLDINGS II LP		CITADEL INVESTMENT GROUP II, L.L.C.
By:	Citadel Investment Group II, L.L.C.,	By:	/s/ John C. Nagel
	its General Partner		John C. Nagel, Authorized Signatory
By:	/s/ John C. Nagel
	John C. Nagel, Authorized Signatory

EX-99.46

Citadel LLC

131 S. Dearborn Street, 32nd Floor

Chicago, Illinois 60603

July 20, 2011

By Overnight Mail and Electronic Mail

Steven J. Freiberg

Chief Executive Officer and Interim Chairman

E*TRADE Financial Corporation

1271 Avenue of the Americas, 14th Floor

New York, New York 10020-1302

Dear Steve:

This letter is written on behalf of affiliates of Citadel LLC (together “Citadel”) which beneficially own approximately 9.8% of the common stock of E*TRADE Financial Corporation (the “Company” or “E*TRADE”).  Citadel has been the largest shareholder of E*TRADE since late 2007, when we led a $2.5 billion cash infusion into the Company, saving E*TRADE from near certain failure.

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.  E*TRADE shareholders have waited long enough.

A Phenomenal Franchise….Squandered

E*TRADE is one of the most recognized and popular online brokerage firms in the industry.  It consistently receives high marks for its trading platform, customer service and usability, and has benefited from strong customer loyalty.1  Yet, despite a powerful brand and excellent products, under the stewardship of E*TRADE’s Board the Company has lost money every year since 2006. The stock has declined a stunning 94% over the last five years, destroying more than $9 billion in stockholder value.

E*TRADE’s stock price continues to be burdened by the Company’s disastrous foray into securitized mortgage-backed securities and third-party originated home equity loans – initiatives that materially contributed to pre-tax cumulative losses which now exceed $5 billion since the beginning of the fourth quarter of 2007.  Beyond those missteps, the Board has repeatedly failed to position E*TRADE to compete effectively against peers that are better managed and capitalized.

And the Responsibility Rests with the Board

The current E*TRADE Board has demonstrated it is consistently unable to create value for shareholders.  A quick review of the Board’s repeated failure to address key issues before they reached crises levels is instructive.

On November 12th, 2007, amid announcements of massive write-downs from the Company’s failed mortgage investments, E*TRADE’s stock dropped by more than 58%. In the ensuing panic, customers withdrew billions of dollars of cash and other assets from E*TRADE’s bank and brokerage business. To stop the panic and avoid near certain failure, the Company secured a $2.5 billion cash infusion led by Citadel.

1 See J. Alex Tarquinio,“The 2011 Broker Survey: Who Tops the List?”, SmartMoney, May 6, 2011 (5 stars for Trading Tools); Elizabeth Ody, “The Best of the Online Brokers for 2011”, Kiplinger’s Personal Finance, February, 2011 (5 stars for Web Site Usability and Customer Service).

However, the Board failed to address the Company’s still weak capital position. The Board failed to follow through on a much needed equity raise when market conditions were favorable.  The Board’s continued inaction over the next year and a half led to the Company being advised that there would be a public regulatory action2 unless E*TRADE raised additional equity capital and reduced debt levels and debt service payments.

Only when confronted with this regulatory action did the Board finally act, with Citadel again stepping forward in 2009 by making a public commitment to invest up to $100 million in E*TRADE’s common stock. In addition, Citadel led the exchange of interest bearing notes for non-interest bearing convertible debentures, whereby $1.74 billion of the Company’s interest-bearing debt was extinguished. E*TRADE ultimately raised more than $500 million in a highly dilutive stock offering in June 2009.

The facts speak for themselves - stunning losses for the Company, catastrophic losses for the shareholders. This is the story of E*TRADE’s poor management decisions. It is not, however, the story of the financial outcome experienced by Board members. Half of the current Board members (Ronald Fisher, Michael Parks, Lewis Randall, Donna Weaver and Stephen Willard) share the remarkable distinction of having presided over the Company’s catastrophic mortgage loan investment strategy. Since 2006, these Board members have received $7 million in aggregate compensation from E*TRADE.

Time to Put Shareholders First

E*TRADE’s Board must take immediate action to consider how best to maximize shareholder value.  We urge the Board to retain qualified, independent and unconflicted financial advisors to explore strategic opportunities in the interest of increasing 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.

It is also time to move toward a Board that is accountable and responsible. With the departure of Robert Druskin as Chairman of the Board and one other Board member, the Board has the opportunity to fill vacated seats with qualified, independent, objective candidates who are not tainted by the Company’s past and ongoing management failures. The Board should seek nominations from its largest shareholders in an effort to secure talented leadership that is committed to the best interests of all shareholders.

Furthermore, E*TRADE should eliminate its staggered board structure which encourages entrenchment and shields poorly performing directors from accountability. Staggered boards have for good reason fallen into disfavor in corporate board rooms across the country and it is inexcusable that E*TRADE shareholders are not permitted to elect the entire Board annually in order to align the interests of management and the Board with those of shareholders.

E*TRADE has reached a pivotal moment where decisive action can be taken to generate value for all shareholders.

2 “We face negative regulatory actions, including a public form of supervisory action by the Office of Thrift Supervision, or OTS, if we do not raise sufficient new cash equity to support E*TRADE Bank and reduce debt at the Company.”  E*TRADE Prospectus Supplement, June 18, 2009 at S-15.

We do not believe the current Board will take these steps on its own.  Accordingly, Citadel hereby requests that the Company promptly call a Special Meeting of its shareholders in order to consider and vote on the following critical matters aimed at maximizing value for all shareholders and increasing Board accountability:

1.   A non-binding advisory shareholder resolution that a Special Committee of the Board, comprised of Directors who have joined the Board within the past three years, promptly retain the services of a nationally recognized investment banking firm that has not previously advised the Company or the Board to undertake a review of its strategic alternatives in order to maximize shareholder value, including a possible sale of the Company.

2.   An amendment to the Company’s certificate of incorporation to remove the existing staggered Board provisions to give shareholders a meaningful voice in choosing the Company’s future.

3.   The removal of Michael Parks and Donna Weaver as Directors of the Company and the election of qualified independent director replacements.

If the Company fails to call for a Special Meeting of shareholders by close of business on July 22, 2011, Citadel will submit the attached notice with respect to its approximately 9.8% ownership interest in E*TRADE’s common stock in favor of calling a Special Meeting of shareholders to consider the topics set forth above.  Pursuant to the Company’s certificate of incorporation, the Company will be required to call a Special Meeting once holders of more than 10% of its outstanding common stock request such a meeting. We urge other shareholders who independently share our views to join in this request by also sending this notice to the Company.

We believe it is time for E*TRADE’s shareholders to come first.

As always, we remain available for further discussion of these very important issues and look forward to hearing from you soon.

Very truly yours,
Citadel LLC
By:	/s/ Adam C. Cooper
Name:	Adam C. Cooper
Title:	Senior Managing Director and
	Chief Legal Officer

Form of Stockholder Notice to Call a Special Meeting

[STOCKHOLDER LETTER HEAD]

[____], 2011

By Overnight Mail

Steven J. Freiberg Interim Chairman E*TRADE Financial Corporation 1271 Avenue of the Americas, 14th Floor New York, New York 10020-1302 Karl A. Roessner Corporate Secretary E*TRADE Financial Corporation 1271 Avenue of the Americas, 14th Floor New York, New York 10020-1302

Gentleman:

The undersigned stockholder of E*TRADE Financial Corporation (the “Company”) hereby provides written notice to the Company that, as a holder of [____] shares of the Company’s common stock and pursuant to (i) Article SIXTH of the Amended and Restated Certificate of Incorporation of the Company and (ii) Section 1.03 of the Amended and Restated Bylaws of the Company, it hereby requests that the Company call a Special Meeting of its stockholders to take place on a date that is no less than 10 days, nor more than sixty days, after the date of delivery of this notice for the following purposes:

1.   To vote on an advisory stockholder resolution that a Special Committee of the board of directors of the Company (the “Board”), comprised of Directors who have joined the Board within the past three years, promptly retain the services of a nationally recognized investment banking firm that has not previously advised the Company or the Board to undertake a review of its strategic alternatives in order to maximize shareholder value, including a possible sale of the Company.

2.   To vote on an amendment to the Company’s Amended and Restated Certificate of Incorporation to remove the existing staggered Board provisions contained in Article SEVENTH therein and provide that the entire Board be elected each year.

3.   To vote on the removal of Michael Parks and Donna Weaver as Directors of the Company and the election in their place of qualified independent Directors.

Respectfully submitted,

[STOCKHOLDER]