Enforcement Actions
Financial Industry Regulatory Authority (FINRA)
CASES OF NOTE
2010
NOTE: Stipulations of Fact and Consent to Penalty (SFC); Offers of Settlement (OS); and Letters of Acceptance Waiver, and Consent (AWC) are entered into by Respondents without admitting or denying the allegations, but consent is given to the described sanctions & to the entry of findings. Additionally, for AWCs, if FINRA has reason to believe a violation has occurred and the member or associated person does not dispute the violation, FINRA may prepare and request that the member or associated person execute a letter accepting a finding of violation, consenting to the imposition of sanctions, and agreeing to waive such member's or associated person's right to a hearing before a hearing panel, and any right of appeal to the National Adjudicatory Council, the SEC, and the courts, or to otherwise challenge the validity of the letter, if the letter is accepted. The letter shall describe the act or practice engaged in or omitted, the rule, regulation, or statutory provision violated, and the sanction or sanctions to be imposed.
July 2010
E*Trade Securities LLC
AWC/2007009471102/July 2010

E*Trade failed to adequately prepare for, and respond to, its acquisition of another member firm and, prior to the conversion, it identified approximately 88,000 converting customers whose login information was likely to be incompatible with the firmís systems. The Firm communicated with those customers and provided them with temporary login IDs and instructions, but an additional number of conversion customers who the firm had not initially identified also had login information that was incompatible with the firmís systems. The login problem led to higher-than-expected call volumes, which the firm was not equipped to handle, and the problem was not completely resolved for several months and the conversion customers continued to inquire about their passwords and access to their accounts. The Firm had over 17,000 unanswered emails from converting customers regarding conversion issues.

The Firm disclosed that a technological problem had prevented it from transmitting customer orders to various market centers on a particular day and, as a result, the firmís customers were unable to enter orders online or log on to the firmís website. The Firm's website experienced sporadic slowness and continued delays because requests had accumulated in excess of what the systems were normally able to process. In addition, the Firm failed to establish a system reasonably designed to supervise, and written procedures reasonably designed to ensure, customersí ability to log in to their accounts and contact customer service for assistance, ensure customersí ability to enter orders online on one particular day and to timely enter orders online.

E*Trade Securities LLC: Censured; Fined $100,000
Tags:  Log On IDs    Passwords    email     |    In: Cases of Note : FINRA
Bill Singer's Comment

See this story: E*Trade Baby Craps on Desk. Transfer Requests Lost. http://www.brokeandbroker.com/index.php?a=blog&id=394

Compliments to FINRA on a strong regulatory move here.  Online customer frustration is a growing industry problem and member firms must be able to scale-up their support services to handle any dramatic growth of customers and website access.  Also, customer complaints/queries must be timely answered.

If you build it, they will come -- if they come, you better be able to handle the volume. 

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