Schwab database glitch temporarily cuts users off

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by Maria Trombly

(IDG) -- Charles Schwab & Co. Monday was forced to temporarily switch its online trading Web site to a backup server because of a database problem, a move that blocked the discount broker's customers from receiving trade confirmation messages and left them unable to view their previous transaction records.

According to Schwab spokesman Greg Gable, the entire Web site was moved to a backup system for six hours after the company discovered a problem with one of the customer databases on its main server. Usage of the main system was restored at about 5:30 p.m. EST Monday, he said.

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Schwab customers were unable to view historical trading data for the entire six-hour period, Gable said. And during the first hour, he added, users of the Web site couldn't get online confirmations of the trades they were making and were instead asked to contact Schwab representatives by telephone.

Gable said Schwab is still evaluating how many customers were affected by the database problem and the switchover to the backup system. The problem wasn't caused by capacity issues, he said, adding that he was unsure whether the snafu occurred in off-the-shelf software or in a homegrown system.

The glitch at Schwab comes less than three weeks after the Securities and Exchange Commission (SEC) released a report written by its staff calling for brokerage firms and securities dealers to evaluate their online trading programs and try to "enhance their practices" in areas such as processing performance and security.

As part of the report's release, Lori Richards, director of the SEC's Office of Compliance Inspections and Examinations, said it's becoming "ever more important for broker/dealers to ensure that their online systems are meeting the needs and expectations of investors," given the rapid growth in Internet-based trading.

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Charles Schwab & Co.

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