"S&P Comstock put out some new code on March 4, and that new code caused decimal truncation errors for some OTC companies," AOL spokeswoman Tricia Primrose said. "So, as a result, people saw some incorrect stock quotes and volume."
She added that a notice was placed in the help section of the quotes and portfolio site and that the problem has been corrected.
But for at least one company that trades its stock over the counter, the fix did not come soon enough. Software firm Ben Ezra Weinstein and Company (BNEZ), which went public last December, saw its stock fall from 1.84 at its close Tuesday to hit a low bid of 87 cents the following day based on misinformed investors pulling out of the stock, according to Jack Ben Ezra, the company's chief executive.
"S&P Comstock, which distributes 15-minute delayed stock quote and market data to America Online, is currently investigating a situation involving some quote information that appeared on the AOL network this week," said Kathleen Golden, an S&P Comstock spokeswoman. "The error has been determined to be an isolated event, which affects the reporting of certain quotes and volume levels for some of the bulletin board stocks listed on the personal finance channel of AOL."
She added that no other S&P Comstock customers were affected. The company serves 18,000 subscribers worldwide and tracks 250,000 securities.
Investors looking into the AOL financial site saw a Tuesday close of 17 cents a share with volume of 1.3 million shares trading hands, but the company had actually closed at 1.84 a share with a volume of about 30,500 shares traded.
"I got 20 calls from investors at my home that night, whereas I had never got calls from them at home," Ben Ezra said. "The investors said they saw the information on AOL."
Yesterday, Ben Ezra was hit with investor calls at his office, along with frantic queries from traders who market the stock. "The market makers called and wanted to know what was going on and why people were selling their stock," he said.
Shares in the company were listed with a correct close on Wednesday of 1.30, but the volume was reported at 20 million shares when actually 205,400 had traded hands. Ben Ezra said he called AOL and was told that they were aware of the problem but that it could not be fixed for several days.
"I'll have to say they were up-front with it and didn't try to dodge anything," he said. But he noted a splash screen to warn investors of the snafu would have performed a better service than placing a notice in the site's help section.
"I don't know if I'll sue. I think Americans are a little too quick to sue," Ben Ezra said. "I would think the ones that would sue are the investors who sold their stock thinking it was down below $1."
Primrose said she does not know the effect of the site's credibility going forward. "In our notice, we say we want people to check the prices, but not necessarily use it to base their transactions," she said. "We relied on S&P for data and that data was faulty. We took immediate action to correct it."
Although figures were not immediately available on the number of companies affected, Ben Ezra said he was told by AOL that a small number of companies had been impacted by the snafu.
"This couldn't have happened at a worse time. Our company is healthy, and we're shipping products," he said. The stock has regained some lost ground but is still down about 24 percent, trading around 1.40 this afternoon.