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Non-Tech : J.B. Oxford -- Ignore unavailable to you. Want to Upgrade?

To: Patherzen who wrote (827)	2/6/1999 12:14:00 AM
From: Gator	Read Replies (1) \| Respond to of 2220

Electronic brokerages come under scrutiny New York launches fact-finding after complaint surge By Emily Church, CBS MarketWatch Last Update: 10:21 AM ET Feb 5, 1999 Silicon Stocks Movers & Shakers NEW YORK (CBS.MW) -- Online brokerage stocks fell Friday on signs that regulators are looking into customer complaints about glitches that result in the inability to use electronic brokerages' Web sites. New York State Attorney General Eliot Spitzer launched an inquiry into the industry after receiving an increase in complaints. Spitzer's office doesn't plan to release the names of brokers that have fallen under the preliminary investigation, a spokesman said Friday. "That would not be not fair until we have the information," said Scott Brown."The companies we're looking at are the ones we've received complaints about from customers." The attorney general is considering the inquiry "an in-house investigation," but Brown indicated that the attorney general would work with other regulators, if necessary. "We're investigating it and the remedy could be any number of things, that's assuming we find that the complaints are legitimate, of course," Brown said. Spitzer "is not prejudging. The remedies could be anything from working with the industry on a voluntary basis, having them give refunds to customers or proposing new legislation." News of the fact-finding at the attorney general comes on the heels of a trading problems at E-Trade Group (EGRP), one of the largest online brokers. See full story. The attorney general can look at companies outside of New York because the office has jurisdiction over any company that does business with a New York State resident. The complaints "have been very similar," Brown said. Customers said, for example, they placed a buy order at an e-broker at 100 and three hours later, they find the trade was executed at 150, he said. "The system crashes, or busy signals... Those are very typical complaints," he said. The attorney general said it has received some 50 complaints in the last 3-4 weeks. "Prior to that it came in drips and drabs," Brown said. "We think (50 complaints) is a lot for us; most people wouldn't turn to the attorney general but to the SEC," he added, referring to the Securities and Exchange Commission. Some analysts say the glitches don't appear to expose the brokerages to criminal activity. "As far as I can tell it doesn't. The reason is that brokerage services are offered on a best-effort basis, subject to market conditions, and that's a pretty broad definition," said Julio Gomez, founder of Gomez advisors, a consultancy which tracks online brokerages. "We've gone through the phase of customer complaints. Step two is that if the regulators get enough complaints they have to look into the matter." Gomez said its too soon to tell if there will be a substantial impact on the industry. The stocks have soared recently as investors try to tap into the boom in Internet-based trading and amid strong speculation that the group is poised for a consolidation wave. Shares of Siebert Financial (SIEB), National Discount Brokers (NDB), Charles Schwab (SCH), AmeriTrade (AMTD) and J.B. Oxford (JBOH) were all sharply lower Friday. The skyrocketing prices have left some industry players aghast. The stock prices "totally make no sense. Even with the prospects for future growth, I can't imagine it," said Kenneth Kraska, president of The R.J. Forbes Group, a deep discount broker, on Thursday. On-line brokerage accounts account for approximately 25 percent of all retail stock trades, according to the Securities and Exchange Commission. The number of online brokerage accounts is expected to exceed 10 million by the end of the year, the SEC has said.