E TRADE Financial Corporation (NASDAQ:ETFC) announced late Wednesday that its biggest shareholder Citadel LLC has decided to offload its entire 9.6 percent stake in the company. Citadel, which rescued the online brokerage firm twice, had also pushed the company for a sale. With the exit of Citadel LLC, E*Trade investors have lost hope of a sale in the near future.

E Trade Financial

E TRADE Financial Corporation (NASDAQ:ETFC) shares were down 6.01 percent to $11.11, making it one of the biggest losers in the S&P 500 Index. E-Trade said Citadel will sell 27.4 million shares in an offering. The online brokerage firm will not receive any proceeds from the sale which is expected to close on March 19. It’s the first sale of E*Trade stock by the hedge fund since April 2011, according to the Wall Street Journal. In April 2011, Citadel had reduced its stake by 50 percent to get below 10 percent threshold so that it can act as an activist investor and push the company for a sale.

Citadel LLC’s decision came more than a month after the New York-based company appointed the former Barclays PLC chief operating officer Paul Idzik as its CEO. Paul Idzik is the seventh chief executive of E*Trade since 2007. During the financial crisis, Kenneth Griffin-led Citadel invested $2.6 billion in E TRADE Financial Corporation (NASDAQ:ETFC) by purchasing a portfolio of souring loans including home mortgages. E*Trade had suffered heavy mortgage losses that year. Citadel thought the brewing economic crisis would be short-lived, which turned out to be far too worse than expected.

After about two years, Citadel again rescued E TRADE Financial Corporation (NASDAQ:ETFC) by offering most of its $1.7 billion debt exchange. Kenneth Griffin took a board seat on the company, and his term is expected to expire at E TRADE Financial Corporation’s annual meeting this spring.

Though E TRADE Financial Corporation shares are down over 75 percent since Citadel LLC made its first investment in the company, the hedge fund has earned $800 million for its stake, people familiar with the situation told the Wall Street Journal. Citadel made the gains by actively buying and selling E*Trade Financial Corporation shares.

E TRADE Financial Corporation (NASDAQ:ETFC) still has $10.3 billion loan, which it plans to bring down to zero. In September 2007, the company had a loan balance of $32.3 billion.