E-TRADE Financial Corporation may have misled investors about the extent of real estate related assets on its balance sheet and failed to properly value those assets.

This is a securities fraud class action lawsuit against E-TRADE Financial Corp. and certain of its officers and directors.

E-TRADE, through its subsidiaries, offers financial solutions to retail and institutional customers worldwide. In addition, E-TRADE offers mortgage, home equity, and margin and credit card products; real estate loans; and various consumer loans, including recreational vehicle, marine, commercial, automobile, and credit card loans.

The class action complaint alleges that E-TRADE issued materially false and misleading statements that misrepresented and failed to disclose:

(a) that E-TRADE was experiencing a rise in delinquency rates in its mortgage and home equity portfolios;

(b) that E-TRADE failed to timely record an impairment on its mortgage and home equity portfolios;

(c) that E-TRADE's securities portfolio, which includes assets backed by mortgages, was materially overvalued; and

(d) that based on the foregoing, E-Trade's' positive statements about E-TRADE's earnings and prospects were lacking in a reasonable basis at all times.

The class action complaint further alleges that on September 17, 2007, E*TRADE announced that it will exit the wholesale mortgage and it is revising its guidance for 2007, among other things. Upon this news, shares of E*TRADE's stock fell $2.32 per share, or over 15%, over the next six trading days as the investing public digested the news.