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E*Trade Chief Denies Bankruptcy Rumors

E*Trade Financial (ETFC) CEO Mitch Caplan on Wednesday "categorically" denied that the online brokerage firm was headed for bankruptcy, during an interview with CNBC.

E*Trade shares lost more than half their value on Monday after a Citigroup analyst suggested there could be a run on the company's bank. The speculation came after the New York-based brokerage firm announced late Friday that it will take further writedowns on its collateralized debt obligations, or CDOs, and second-lien securities portfolio.

Caplan said that the writedowns and negative news coming from E*Trade did not make the company more vulnerable to a buyout. Observers had renewed speculation that the online brokerage firm could be ripe for a takeover as a result of the writedowns and fears of bankruptcy.

"There's so many people that are interested in our franchise," Caplan said during the CNBC interview. "I think it does not make us any more or less vulnerable for a takeout."

Still, Caplan did not rule out the possibility of a sale.

Caplan's remarks to CNBC came after the CEO canceled a scheduled presentation slated for earlier in the day at a major investor conference, raising speculation about a possible sale or management change at the beleaguered firm.

E*Trade, which provides online banking, brokerage and lending to retail and institutional customers, joined the likes of Countrywide Financial (CFC) and Washington Mutual (WM) and other smaller lenders hit hard by the housing downturn and mortgage deterioration, particularly as the secondary market for mortgages ground to a halt. The stock is down more than 80% this year.

Market chatter earlier this year had TD Ameritrade (AMTD) and E*Trade discussing a possible merger.

Shares closed up 54 cents, or 10.8%, to $5.54 on Wednesday.

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