E*Trade Surges on Latest Deal Talk

Updated for closing share prices, information on TD Ameritrade CEO's comments, spokesperson statements from both companies.

NEW YORK (TheStreet) -- E*Trade Financial(ETFC) shares spiked higher late Wednesday as talk of a potential acquisition popped up once again.

Earlier in the day, the company reported lackadaisical October trading activity for its customers although the latest metrics provided evidence the New York-based online broker continued to reduce its bank-related deposit assets.

But after trading modestly higher for the majority of the day, the stock jumped with less than hour of trading left, rising as high as $1.75. It closed up 9% at $1.69. Volume, which stood at around 20 million at 3:15PM EST, spiked to nearly 130 million.

The buying interest stemmed from comments made by TD Ameritrade(AMTD) CEO Fred Tomczyk at a Reuters conference that talked about the possible M&A activity by the Omaha, Neb.-based company. TD Ameritrade has long been talked about as a potential acquirer of E*Trade, and a company representative addressed the speculation.

"It was taken out of context," TD Ameritrade spokesperson Kim Hillyer told TheStreet when asked about reports which mentioned the company as being specifically interested in E*Trade. Hillyer said Tomczyk talked about the different uses of cash and an acquisition was only one of the options discussed. He was also asked specifically about M&A, Hillyer said, to which he responded that the company would do what was best for the clients and shareholders.

The Reuters report states that Tomczyk said an acquisition was "the best use" for TD Ameritrade's considerable cash position, and that the company would be interested in a deal involving E*Trade "under the right circumstances." The report also said Tomczyk stated TD Ameritrade was "primarily interested" in a deal involving other online brokers, and that he felt it would be "prudent" for the company to eventually pay a dividend. On Oct. 27, when TD Ameritrade reported its results for fiscal 2009, the company reported a total cash position of roughly $6.6 billion as of Sept. 30. TD Ameritrade shares closed down a penny at $21.26.

Pam Erickson, a spokesperson for E*Trade, provided this statement when asked about the stock's trading activity: "E*TRADE's Board of Directors and executive management team review any and all business opportunities in the best interests of its customers and shareholders. The Company does not comment on marketplace speculation or rumor."