Datek Online, one of the nation's fastest-growing online brokers, said yesterday that a group of private investors had agreed to pay $700 million to acquire a controlling stake in the company.
The buys plan to spin off the Island E.C.N., Datek's popular electronic trading platform that acts as a kind of miniature stock exchange, Datek executives said. The Island E.C.N. now accounts for more than 13 percent of Nasdaq trading volume.
Datek, which is based in Edison, N.J., will be acquired by Bain Capital, a large Boston-based private equity firm; TA Associates, a venture capital firm also based in Boston; and Silver Lake Partners, a venture capital firm in Menlo Park, Calif. The group will pay $500 million to buy out the stakes of the principal shareholders of Datek and invest another $200 million to strengthen its operations.
The planned sale of Datek, which helped pioneer the era of discount online trading by charging $9.99 a trade, will wrest control from a group of owners and former executives who ran the company during much of the 1990's when its former day trading unit came under regulatory scrutiny after accusations of illegal trading practices and questionable offshore transactions.
The company, which has been the subject of inquiries by the Securities and Exchange Commission and the United States attorney for the Southern District of New York, says that investigations of the former day trading unit, which was spun off in 1998, may have prevented other big investors from taking a stake in the company.
''This is a significant change in the ownership of this company,'' said Edward J. Nicoll, the chairman and chief executive of Datek. ''We look forward to once and for all putting those matters in the past.''
Datek, which is now the nation's fourth-largest online broker, with more than $14 billion in customer assets, says the new ownership and the infusion of $200 million in capital should strengthen its operations and aid growth.
Mr. Nicoll said that even with the recent downturn in technology stocks, Datek was continuing to gain market share in daily trading activity and that on Thursday the Island E.C.N. traded a record 360 million shares.
The company said it did not plan to offer shares to the public soon, but if market conditions improved both Datek and the Island E.C.N., which is now 85 percent owned by Datek, could eventually go public. Datek also said that spinning off the Island E.C.N. as a separate company would probably bolster its business with other brokers and help pave the way for S.E.C. approval for it to become a registered stock exchange.
In acquiring Datek, the new majority owners agreed to buy out Jeffrey Citron, the company's founder and former chief executive, and Sheldon Maschler, who was once the head trader at Datek, when it operated largely as a day trading firm in the 1980's to the mid-1990's.
Datek officials said the two men, and other former owners, had sold all of their voting shares, but would retain a 10 percent stake in the company.