July 28, 2007

What to Do if You Can't Reach the Broker

By Jeff D. Opdyke and Susanne Craig
July 28, 2007; Page B1

The hardest time to reach your broker might be when you need him the most.
Louisiana school bus driver Martha Dickson was returning from her morning route on a difficult trading day in 2001. Worried that her and her husband's life savings would be hit, she says she called her Morgan Stanley broker several times. Instead, she says her calls went right to his assistant who assured her everything was fine.

Whether caused by international turmoil or a market selloff like happened on Thursday and Friday, investors can, on occasion, find themselves unable to trade because online electronic systems are overloaded, or because their broker is suddenly unreachable by phone.

Ms. Dickson eventually cultivated a relationship with another more-responsive broker who worked in the same office as her broker and shifted her business to him. The Dicksons also filed an arbitration claim against Morgan Stanley, claiming the firm gave them fraudulent investment advice. A Morgan Stanley spokesman says allegations the Dicksons couldn't reach their original broker are baseless. "Someone was always available to discuss client concerns."

At a time when stock prices are sinking and trading activity surging -- and investors are flooding brokerage firms with sell orders -- what's an investor to do?

In an electronic age, orders left on voice mail or delivered by email or fax would seem to circumvent any potential roadblock. Only, they don't. Brokerage firms generally won't accept such orders because firms can't guarantee when a broker will get around to checking such messages on a busy day.

The key to getting your orders into the system: Know all of the channels your brokerage firm offers. For most firms these days that means online trading, interactive voice-based trading on the phone, toll-free customer-service phone numbers, and, increasingly, access via wireless devices like BlackBerrys. But each of these may require a password or different phone numbers, and investors need to have that information at hand.

If you're away from your computer and you can't reach your broker on the phone, call another branch in another city or state; they should be able to assist.

You can also protect yourself. E*Trade and Morgan Stanley say clients may want to consider setting up standing stop-loss orders that will automatically implement pre-existing sell orders when a particular price target is reached. This way, even if the market is tanking and you can't get through, your orders will be executed.

Joseph C. Peiffer, a New Orleans-based lawyer who represents customers with complaints against Wall Street firms, says it's unusual for investors to bring a case of negligence simply because they couldn't contact a broker on the phone. However, that complaint is a familiar refrain with clients who've lost money, and it's often an element in most of the cases he has handled.

"Brokers are always happy to talk when things are going up," he says. "But market drops expose other problems in a customer's portfolio, and often the broker just won't get on the phone when that happens."

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