Citadel Equity Fund, an affiliate of hedge fund manager Citadel, is to sell nearly 27.4 million shares of common stock it holds in E*TRADE (NASDAQ:ETFC) on or about March 19. The shares are to be sold via an underwritten secondary offering. As such, E*TRADE will not receive any monies from the sale.

Citadel is the largest single shareholder in the discount brokerage. It began amassing its stake in late 2007. That stake currently amounts to just under 10% of E*TRADE's total of 286 million shares outstanding.

The sole underwriter of the deal is Citigroup. It wasn't revealed how Citadel Equity Fund would employ the proceeds from the sale.