The New York Stock Exchange (NYSE) fined TD Waterhouse Investor Services Inc. US$225,000 yesterday and censured it for problems related to Web site failures that temporarily stopped it from filling online stock orders and inadequate customer service related to the outages.
According to an NYSE statement, the nation’s second-largest discount broker was unable to process online customer orders on 33 different trade days between November 1997 and April last year. The Web site failures ranged from two minutes to one hour and 51 minutes.
The NYSE also said in its decision that TD Waterhouse didn’t adequately advise customers of an alternative telephone order entry system, respond to 18,000 verbal and 2,300 e-mail complaints, or maintain telephone routing systems to handle orders. That resulted in “…lengthy telephone hold times of up to 60 minutes for customers seeking to contact the firm,” said the NYSE.
Despite those problems, TD Waterhouse continued to sign up new customers while advertising its online trading system, webBroker, the NYSE said.
TD Waterhouse accepted the penalties without admitting or denying its guilt, the NYSE said.
“What we were actually sanctioned for by the NYSE was not (the) down system itself but the way we handled it,” a TD Waterhouse spokeswoman said.
She added that the software issues that caused the outages have been resolved. But she declined to elaborate on exactly what those technical problems were.
“We haven’t had any problems with Web-based systems since the end of the review period, which was April 2000,” she said.
The NYSE decision follows a U.S. Securities and Exchange Commission (SEC) staff report released in January that called on brokerage firms and securities dealers to evaluate their online trading programs and work to improve areas such as processing performance and security.
On Feb. 12, Charles Schwab & Co. was forced to switch its online trading Web site to a backup server for six hours because of a database problem, a move that blocked the discount broker’s customers from receiving trade confirmation messages or viewing previous transaction records.
