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Non-Tech : E*Trade (NYSE:ET) -- Ignore unavailable to you. Want to Upgrade?

To: Sharise Brown who wrote (4849)	2/4/1999 5:04:00 PM
From: redbird	Respond to of 13953

-- [B] ETrade seen target of class action suits on service outages -- By Joe Bel Bruno, Bridge News New York--Feb 4--Some of the nation's top class action litigation firms said they have already been approached by customers of ETrade claiming they lost money after the nation's third-largest online brokerage experienced service outages within the past 2 days. * * * Lawsuits could be filed within the next several days on behalf of disgruntled customers that claim ETrade's pledge of "trades 24 hours, 7 days a week" are deceptive, sources said. Meanwhile, shareholder lawsuits could be filed claiming management is not meeting obligations. Attorneys say litigation would likely be filed within the next few days, with customers seeking damages from money lost due to missed transactions and on false advertising. "There is a strong possibility you will see litigation filed within the next few days," said Steve Sidener, an attorney with Gold & Bennett & Sera based in San Francisco. "This is a serious public problem as a lot of these Internet brokerage houses are making representations to the public and not following through on them." Sidener, whose firm is leading a class action against Peoplesoft, said Gold & Bennett is investigating claims by the disgruntled customers and could file the proper documents by next week. He would not comment further who the clients are, or anything about their specific complaints. ETrade's site was done for several hours today after a newly installed software package malfunctioned for the second day in a row. Although the system came online this afternoon, the company said it was still investigating the exact cause of the service interruption--prompting hundreds of messages on financial message boards on the Internet complaining of the glitch. In the meantime, the more than 650,000 ETrade clients were directed to the company's toll free number to place any pressing order. The company said it has already gotten about 2,000 complains via email in the past 48 hours. ETrade and other online brokerages have had similar technical snags in the past several years as the online brokerages race to expand capacity to meet the explosive growth of online and day traders using the Internet. In the fourth quarter, there were more than 340,000 transaction completed online daily--up 38% from the previous quarter. An estimated 5 million investors conducted transactions online last year. But, with this massive growth in users coupled with malfunctions, some attorneys say the company could be held liable for maintaining their advertising blitzes. "The case hinges on the fact that they know they are having problems, but at the same time they haven't curtailed their advertising and haven't stopped signing on people," said Michael Swick, an attorney with New York-based Milberg Weiss Bershad & Hynes. "There's some definite merit for a case if customers come forward. I certainly haven't seen a slowdown in any of the ads by the online brokers...they just keep rolling out the ads, which is something you shouldn't do if you are having problems." Swick said state and federal law would cover firms that have "deceptive advertising," and promise services that they can't deliver upon. Shareholders wouldn't really have much of an opportunity to file a class action as shares have skyrocketed among all the major online brokers during the past several months, he said. Despite two days of bad press on its system, ETrade opened nearly 8% higher this morning, but has since come off its highs. Its shares ended down 1 3/4, or 3.17%, at 53 1/2. Other online brokerages are also down today on concern about online brokerages. Charles Schwab & Co. ended down 1 11/16, or 2.48%, at 66 5/16 and Ameritrade Group was hammered, plunging 17 13/16, or 13.86%, to end at 115 3/4. Shares of these firms fell even farther after it was disclosed the New York Attorney General's office has launched a probe to determine if the nation's online brokerages should be held liable for the service outages. Schwab, Ameritrade and others have also reported similar problems in the past. The Attorney General's action coupled with class action lawsuits could pose serious legal jeopardy for ETrade, one source said. "Their stock is very volatile, up and down with huge swings, so we're concerned what more bad news might do to its value," said one anal ysts that did not want to be named. "These things need to be fixed now or this will seriously cut into their earnings." "The one thing you don't want," he said, "are a bunch of lawsuits complaining about service." End Bridge News, Tel: (212) 372-7535 Send comments to Internet address equity@bridge.com Symbols: US;EGRP US;AMTD US;SCH Source [B] - BridgeNews Global Markets Categories: