Schwab Site Goes Offline

Charles Schwab & Co. experienced mainframe computer problems on its online site shortly after the opening bell Wednesday morning, halting trading and angering many customers.

San Francisco-based Schwab (SCH) said it responded immediately, however, by setting up access to stock quotes and trading through an automated phone system.

"There are other ways to reach us even if there is a Web problem," Susanne Lyons, president of Schwab's retail brokerage group, told CNBC. "People still could get through to us today."

The company said the majority of the calling customers that are put on hold for more than five minutes would receive $500 in commission-free trading for the day. Others performing one trade through the phone or at walk-in sites would not be charged for that trade.

The service, which crashed for an hour, resumed as of 1:30 p.m. Eastern time, but slowly, according to a company spokeswoman.

"Because of the back-up, we have to stagger service or it will tax the system," said Schwab spokeswoman Tracey Gordon.

Schwab is first in the industry for online accounts and trading volume, according to Internet consulting firm Gomez Advisors. Its breakdown is the latest in a slew of service interruptions at major Internet brokerages.

Online brokers E-trade (EGRP) and Ameritrade (AMTD) also experienced disruptions earlier this year, highlighting the difficulties the rapidly-growing industry in handling an overflow of new customers.

Those problems have drawn attention from legal authorities, such as the attorney general of New York, who is looking into the industry for possible law violations. The companies say they have done nothing wrong.

Written By Lisa J Ulmer, CBS MarketWatch