October 19, 1999

Kathy Levinson, President and COO
E*TRADE Group, Inc.
4500 Bohannon Drive
Menlo Park, CA 94025

Dear Ms. Levinson:

So far I’m not impressed. Here’s my tale.

I thought I would move some stray 401k funds into a self-directed IRA. I found it difficult to find the correct forms online at E*Trade. I ended up sending an application for a rollover account. Along with it I included my most recent 401k statement. Your site was good at warning me that it would take several weeks for anything to show up, but after 4 weeks I sent an email. I received no response to my email…ever. Then I called, and got an immediate response. My application had been received, but there was no record of receiving my 401k statement. I was pointed to another form, and told to send it to a separate address, different from the one I had sent my application. This form’s instructions didn’t match the form (In one place it said to sign the form in a particular section, but on the form that section was reserved for E*Trade use.). I sent the form in, and the rest of the rollover went smoothly.

Looking for a home for my restricted shares of a recent IPO company, I decided to send the certificates to E*Trade (you are my only broker though not my only holdings). The instructions were not clear on how to fill out the back of the certificates, and so I sent an email asking for assistance. I received no response to my email…ever. I called and got an immediate response. The agent’s instructions were clear, and I sent the certificates off. Since I needed to keep these shares separate from my 401k/IRA, I established a second account. Because of my previous experience, I sent the certificates to the address for securities, and sent my application confirmation to a separate address for applications. I did include a copy of the signed application with the certificates so that the shares would end up in the right account. On the copy I had put a note saying the original was sent to the other address on a specific date. A few days later my certificates were returned with a note saying, "only original signatures could be accepted." The certificates came from a Boston clearing house, the letter had a different E*trade address, and the certificates, of course, needed to be returned to yet a third address. I signed the form, and sent off the certificates. The result, I received two copies of my account confirmation. Obviously the right hand didn’t know what the left hand was doing.

Today I received notice that I had to fill out a form to authorize the lifting of the restrictions on my shares. I was expecting this. However, as you can see from the enclosed, the letter specifies an address that is unknown because the "mail merge" failed to pickup the information from the database. Thus I am instructed to send form NAME OF FORM HERE to: Department, Address, City, State, Zip.

In isolation, none of these really so terrible, but in aggregate they serve to erode my confidence in E*Trade. To recap and add some items, here are my observations:

1. Rollover signup has inconsistencies (inaccurate instructions, establishing an account and submission of forms for rollover should be combined)
2. I find it confusing having two accounts identified only by number. I suggest that everywhere an account number is shown, its type also be shown, such as "1170-3563, IRA rollover."
3. Too many addresses.
4. Instructions on completing the backs of securities are not sufficient for novices.
5. I was concerned that my tele*master pin was sent in the same note as my account number.
6. Your phone support is outstanding. Your email support sucks. I prefer email.

Obviously I would not take the time to send you this note if I weren’t committed to your success. I am prepared to accept that the areas in which I had difficulty are not either the types of services that make up the bulk of your revenues or that I am more of a novice investor than is typical. In such a case I would not blame you for focusing on other, more important aspects of your service. If, however, you are seeking more novice investors and rollovers from 401k plans, then I hope you will take these suggestions to heart. I look forward to being a longtime customer.

Regards,

Marc Auerbach