In response to a recent surge of customer complaints about online stock brokerage firms, Attorney General Eliot Spitzer announced that his office is launching an inquiry into the industry.
Over the past month Spitzer's office has received dozens of complaints from consumers using online brokerage services.
As part of the process, Spitzer is sending letters to several online firms, asking them to provide documents, reports, and other information regarding their services.
"The public knows that there are always risks involved in investing in the stock market," said Spitzer. "But part of that risk should not include questions about whether trades will be executed promptly or whether online brokerage firms can deliver on the services that they've promised."
Last year, seven million people, about one of every four people trading in the stock market, had online accounts. That number is expected to grow to 10 million this year.
Consumers have complained about frequent system crashes, server unavailability, and long delays in executing trades. Some customers have reported losing thousands of dollars due to slow trading.
Spitzer added that he was seeking full and voluntary cooperation from the industry to find solutions to the current problems, as well as to develop safety precautions to protect investors.
Philip Feigin, Executive Director of the North American Securities Administrators' Association: "This action by the Attorney General reinforces what we and other regulators have been saying to people setting up online accounts. Read all contracts and customer disclosures carefully to know what you're getting and not getting. Understand that in volatile markets, you may not get the price you want and that sometimes, demand may overwhelm the capacity of the technology."
To aid in his investigation of the online brokerage industry, Spitzer is posting a questionnaire on his website so that consumers can provide his office with information about their personal experiences and any problems that might have had with the industry.
The inquiry is a joint effort between Spitzer's Internet Bureau and his Investor Protection and Securities Bureau and is being handled by Assistant Attorneys General In Charge William H. Mohr and Caitlin Halligan, and Assistant Attorneys General Joel Michael Schwarz and Jean Marie Cho.
For more information about Internet-related topics, or to complete the Attorney General's online brokerage service questionnaire, consumers are urged to visit his World Wide Website at:www.oag.state.ny.us