Thousands of Investors Locked Out of Brokerage Accounts During Market Plunge
The world's stock markets took a tumble on Monday, with the Dow Jones Industrial Average closing down more than 1,000 points. But for many investors, the day's biggest challenge wasn't the market itself, but the inability to trade due to technical issues experienced by some of the largest brokerage firms.
Outages Hit Major Brokerages
Brokerage firms including Charles Schwab, Fidelity Investments, and Vanguard all reported temporary technical issues on Monday, preventing investors from logging in to their accounts and making trades during a period of intense market volatility.
According to Downdetector.com, a website that tracks outages, over 15,000 Schwab clients reported issues with their accounts, along with 3,700 Fidelity users and 2,800 Vanguard customers. The outages also impacted other popular platforms, including E-Trade and Robinhood.
Charles Schwab confirmed in a post on X (formerly known as Twitter) that some clients experienced difficulties accessing its platforms due to a technical issue. The firm apologized for the inconvenience and stated that its teams were working to resolve the issue as quickly as possible.
While complaints about access issues dipped significantly by late morning, some investors expressed frustration about being unable to move their assets during the market sell-off. The S&P 500 dropped more than 4 percent in early trading on Monday, while the technology-heavy Nasdaq composite fell nearly 6 percent.
David Fonseca, a Fidelity account holder from Knoxville, Tennessee, described the situation as "nerve-racking," saying he was unable to sell some of his stock options as soon as the market opened due to the outage.
“It was kind of nerve-racking to see things moving when I wanted to sell,” Mr. Fonseca said. “I felt really, really nervous.”
Schwab Says Outage Was Resolved
Schwab, Vanguard, and Fidelity did not immediately respond to requests for comment on the cause of the disruptions. However, Charles Schwab posted on X around noon that the issue had been resolved, and users reported being able to access their accounts again.
This incident highlights the growing reliance on online platforms for financial transactions and the potential consequences when these systems experience technical difficulties. While many outages are resolved quickly, the disruption can be frustrating and anxiety-inducing for investors, especially during volatile market conditions.
A Scam Targeting Schwab Account Holders
While the outages were undoubtedly frustrating for investors, a separate scam targeting Schwab account holders adds another layer of concern.
The scam begins with a text message that includes the recipient's name and asks if they made a specific scheduled transfer. The scammer then calls the victim, pretending to be a customer service representative, and guides them through fraudulent wire transfers to steal funds.
Marotta emphasizes the importance of being vigilant and taking precautions to avoid falling victim to this type of scam. He advises silencing unknown callers on cell phones, distrusting all incoming calls unless initiated by the user, and never wiring money to an unknown source.
A Reminder of the Importance of Security
Both the widespread outages and the scam targeting Schwab account holders underscore the need for financial institutions to prioritize security and reliability in their online platforms. These events serve as a reminder for investors to be cautious, verify all communications, and protect their personal and financial information.
What's Next?
It remains to be seen if the outages will lead to any regulatory scrutiny or investigations. However, it is likely that these events will prompt industry discussions about the importance of system resilience and the need for robust cybersecurity measures to protect investors from both technical issues and fraudulent activity.
