E*TRADE's Philippines Office Raided Over Illegal Trades

E*TRADE Financial Corporation’s (NASDAQ:ETFC) office in Manila, Philippines was raided by authorities and around 36 employees were arrested as part of an investigation into the company’s alleged illegal trading for U.S. customers’ accounts.

The news, first reported by the New York Post on Friday stated that the raid and arrests took place on May 10. Also, the authorities confiscated various office equipments including computers and printers. The detained employees, however, had been released.

It is alleged that the New York-based online brokerage firm did not possess a license to execute trades in Philippines. Notably, the Manila office was established only for handling customer support services.

Chief Executive of E*TRADE Paul Idzik acknowledged the news internally to employees in an e-mail dated May 12. Idzik stated in the email, “As you may be aware, E*TRADE’s Manila office was evacuated earlier this week in response to a local investigation. Since then, the office remains temporarily closed, and all customer traffic is being routed to our Sandy [Utah] and Alpharetta [Georgia] locations.”

E*TRADE mentioned that it believes that the allegations by the authorities in Philippines are “completely without merit, and are cooperating fully, while vigorously defending ourselves and our colleagues.” The company also stated that that it does not view the issue as a material event.

Currently, E*TRADE carries a Zacks Rank #3 (Hold). Some better ranked stocks in the finance space include Raymond James Financial, Inc. (NYSE:RJF) , KCG Holdings, Inc. (NYSE:KCG) and LPL Financial Holdings Inc. (NASDAQ:LPLA) , each sporting a Zacks Rank #1 (Strong Buy).

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