Schwab Web-Site Outage Handcuffs Traders

Adding insult to a very injured day on Wall Street, many investors were unable trade stocks online for part of the day Friday through the Web site and automated telephone system of Charles Schwab (SCH), the nation's largest discount-brokerage firm.

That meant that many Schwab customers, trying to bail out in a plunging market, had to call in and wait to talk with a live broker.

In some cases, customers sat on hold for more than a half-hour, listening to a recorded message telling them news about how much further the stock market was falling.

A Schwab spokesman, Greg Gable, said that the firm's Web site was down for a half-hour in the afternoon and that it was running on a backup system after its primary system failed.

Gable later acknowledged that the company was also having "sporadic access problems with the backup system."

He said the problems were a result of internal computer software glitches, and were in no way similar to recent attacks by Internet vandals on other Web sites including Yahoo!, CNN.com, and Schwab rival E*Trade (EGRP).

The problems came on the same day that the Nasdaq stock market was unable to update the widely followed Nasdaq Composite Index and some other market information for nearly three hours because of a broken communication line from a computer.

With more than 3 million users of its online trading services, San Francisco-based Schwab is the largest U.S. online brokerage.

The company initially said that its computer backup system had restored normal trading, and that the outage had only lasted a half-hour, from 1:45 p.m. to 2:15 p.m EST.

But investors were dismayed to find that the backup system did little to jump-start trades again.

"About 10:30 or so, I tried to get in. No dice," a software developer from San Diego who trades through Schwab wrote in an email. "They had something up that said they were on a backup system, but you couldn't access positions or enter trades on this backup, and as far as I could tell, orders could not be entered through the end of day."

Others said that some aspects of the site appeared to work, but that the site failed each time a trade was placed. "As the market sold off in the afternoon, each time I entered an order, the Web page came back saying 'Error' in red letters. The rest of the page was blank. This is not a normal response to any Schwab problems," said J.E. Hankins, a Loveland, Colo.-based daytrader.

Schwab's stock fell with the rest of the market, closing down 1 3/16, or 3%, at 38 1/4.

The software problems were not the first for Schwab. Late last November, the company's trading site and automated phone-trading system were down for a brief period. A month before that, Schwab suffered three straight days of intermittent technical problems, including a two-hour outage of the Web site and phone system.

>To order reprints of this article, click here: Reprints