Fallout from the surge in trading volume on October 28 has spurred the Securities and Exchange Commission to look into complaints from customers of online brokerage houses that claim they were locked out of trading during the frenzy.
Online investors complained that they had trouble accessing their accounts between October 27 and October 28, when both the New York Stock Exchange and Nasdaq posted their greatest one-day drops, followed by their largest one-day gains, in history.
The SEC, as a result, is "looking into the issues that resulted from the large volume," said spokesman Duncan King.
While King would not specify how many online brokerages had been contacted in the course of the agency's fact-finding mission, he said the SEC was "aware of the situation and...looking into it."
One brokerage contacted by the SEC, E*Trade, said it had 10,000 users trying to access its site during the trading surge--more than double the 4,000 average number of users who regularly access the site.
"We understand that representatives of the NASD (National Association of Securities Dealers) and the SEC plan to visit all online investing firms, and have indeed already visited several," said an E*Trade spokesperson.
"[The SEC and NASD] visited us recently," added Tom Taggart, spokesman for Charles Schwab. "The SEC visits us on a very routine basis, and their most recent visit was to find out about our firm's capacity [for surges in online trading]."
Taggart added that the brokerage has not yet heard of any particular directives in the inquiry, other than fact-finding.
Both E*Trade and Schwab have been in the process of upgrading their systems to allow for additional capacity since the October traffic jam. E*Trade says its system currently allows for 75 percent of its total subscribers to access the system simultaneously.
Neither E*Trade nor Schwab's Web sites feature a warning to users that access is not guaranteed, but as Alex Goor, executive vice president of online brokerage Datek pointed out, investing in the stock market, whether virtually or physically, always carries certain inherent risks.
"I think all the exchanges fared incredibly well," Goor said. "They've never had one billion-plus days [in trades] before. You never promise an investor that everything is going to work perfectly."