Another Outage Trips E-Trade

E-Trade said Thursday it's restoring service to its site after another bout of service problems made online trading impossible for its clients for a second-straight day.

The Web's third-largest online brokerage (EGRP) said it doesn't know how many accounts were affected, but it's working to fix the problem. "We're restoring service to customers," said spokesman David Murray. "Some are still without service, but we're bringing it up."

Investors visiting the site to conduct trades were greeted with a special notice about the outage: "Access to some areas of your account may be temporarily unavailable," it said. "As an alternative, you can access your account through TELE*MASTER, our voice and touch-tone telephone investing system @1-800-STOCKS-1."

E-Trade shares, which initially lost ground as publicity about the failures got around, gained 1/2 to 55 3/4 even as several other e-brokerages saw their stocks surge.

The problem, which surfaced on Wednesday, was traced to a malfunctioning new software installed Tuesday night at the Silicon Valley firm.

Several E-Trade members e-mailed CBS.MarketWatch.com to complain about difficulty both with getting access to the trading function and calling the company to trade stocks.

An E-Trade customer who contacted CBS.MarketWatch.com said he's taken to calling the online broker "C-Trade -- for 'Can't trade.' "

"This is the second day," said Steve Scott, the flustered E-Trade client. "If this goes into a third day, I'm going to start looking around."

E-Trade's service also suffered two failures during Wednesday's session.

The first breakdown lasted two hours and eventually affected all of E-Trade's 676,000 accounts. A smaller outage occurred later in the session.

The company claimed it had fixed the problem by the end of the trading day, but members who e-mailed CBS.MarketWatch.com claimed they still couldn't get through.

Online trading of securities is surging, according to a new report. Some 5 million Americans now use the Web to trade stocks.

As the surge of usage has taken place, service problems have cropped up at Charles Schwab, Ameritrade and others as well as E-Trade.

Written By Steve Gelsi, CBS MarketWatch