E*Trade in Free Fall

Updated from 12:30 p.m. EST

E*Trade Financial(ETFC Quote) shares were in free fall Monday after a Citigroup analyst stoked panic about a higher "probability of a run on the bank."

Citigroup analyst Prashant Bhatia also downgraded the stock to a sell rating, sending E*Trade shares plummeting almost 60% to $3.55. While some other brokers also dropped on the news, the financial sector overall was rebounding slightly from last week's selloff.

"There may be layers of protection for customers (multiple charters, other forms of insurance, etc.), but in our view, customers may withdraw assets first and ask questions later," writes Bhatia, adding this could lead to forced selling of the firms' newly devalued asset-backed securities portfolio. ...