E*Trade’s online and mobile trading systems went dark for several hours on Wednesday, frustrating investors who were looking to make trades up to and immediately following the release of the minutes from the most recent Federal Reserve meeting, information that’s considered highly informative and potentially actionable to both institutional and retail investors.
While the outage began affecting clients around 10:30 am ET – and a good three-plus hours ahead of the 2 pm release of the Fed minutes – E*Trade finally acknowledged the disruption via Twitter shortly after 1 pm. A little more than two hours later, it followed up with a tweet announcing that the site had been “fully” restored.
Since the all-clear tweet around 3 pm on Wednesday, there have been no further updates from E*Trade either on its website or via Twitter. Repeated calls and emails to E*Trade’s corporate communications team have thus far gone unanswered.
One important question – raised by a number of people on Twitter including @BlackHawkTrader – is whether or not the site was hacked and whether, as @MechTxEngineer pointed out, this loss of access to online trading accounts at inopportune times was just the price of doing business with online trading platforms.
“If you lost your arse on this, you need to look in the mirror and evaluate your risks,” @MechTxEngineer wrote. “DDOS attacks happen.”
While distributed denial of service (DDoS) attacks certainly do happen and have crippled major online brokerages in the past, including an April attack on Charles Schwab & Co.’s website, it’s unclear if that was the case in this time. An unnamed E*Trade spokesman told The Wall Street Journal that the company was still trying to figure out what caused the outage but claimed it wasn’t the result of a security issue or a privacy breach.
If E*Trade has gotten to the bottom of this latest problem, it still hasn’t shared its explanation with clients, Twitter followers or the vast majority of the business and technology media.
E*Trade wasn’t the only online brokerage to disappoint clients ahead of the release of the Fed minutes report. Scottrade also experienced an outage between roughly 9:40 am and 10:30 am ET, just before or overlapping with the period during which E*Trade users were first affected.
Scottrade officials acknowledged the initial outage and subsequent restoration of service via Twitter, but have not provided any additional updates or explanation on either its website or its Twitter feed.
Some security experts aren’t terribly surprised that two major online brokerages went down on the same day.
"Since (the April 2013 attack from the Syrian Electronic Arm on the Associated Press Twitter account), we’ve seen a number of incidents on exchanges, some of them more public than others," said Roel Schouwenberg, principal security researcher at Kaspersky Lab. "Some of the statements for these incidents didn’t explicitly rule out the possibility of an attack being the cause of the incident."
For clients at both brokerage firms, many questions remain unanswered including how many accounts were affected, what E*Trade plans to do to prevent future service outages and what, if any, recourse will they have in the aftermath of this poorly timed disruption of trading services.
As @chrisrotella put it: "Difficulty means I forgot my password or need to clear cookies…You have a total website failure! It’s your difficulty!"
Schouwenberg said these types of disruptions figure to only increase in frequency and scope over time.
"The increased reliance on high-frequency trading further complicates this matter," he said. "It's likely that this increased reliance will make attacks more successful. It may also add to an increased risk of natural outages. As such, I expect to see more of these incidents this year."