E*Trade launches investment bank

E*Trade (NYSE:EGRP), along with Robertson Stephens founder Sandy Robertson, is investing in E*Offering. The company was founded by Walter Cruttenden III, the former CEO and president of Cruttenden Roth, who will serve as president.

E*Trade will own around 28 percent of the company, and E*Trade CEO Christos Cotsakos and COO Kathy Levinson will serve on the board of directors. E*Trade will have the option to expand its ownership to 51 percent. Further financial details were not released. E*Offering plans to begin underwriting public offerings later this year, and hopes to give individuals greater access to the process, the investors said.

"By combining E*Trade's techno-marketing capabilities with some of the most respected pioneers in investment banking, we're creating a new breed of company," Cotsakos said in a release. "E*Offering is another step in our journey toward democratization of the financial services markets. It means more access to the public financial markets for individuals and a far more cost-effective service model for emerging companies who now can have better control over their most important asset -- their company's shares." E*Offering will conduct the bulk of its business online - including IPO roadshows, share distribution and research dissemination. The company plans to offer up to 50 percent of every public offering online, generally offering first access to E*Trade customers.

The company will initially focus on underwriting $25 million to $50 million deals, and providing research coverage, but plans to expand into services such as private placements convertible debt and straight debt.

E*Trade has been on a role lately, announcing a smaller than expected loss for the first quarter. The company's stock has been racing after it announced plans to invest in an electronic trading network and declared a stock split.

In the first quarter E*Trade added 132,000 new active accounts, up 55 percent from the previous quarter.