Ad Campaign To Warn Online Traders - InformationWeek

InformationWeek is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them.Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.


Ad Campaign To Warn Online Traders

The results of a nine-month investigation into online trading have prompted the New York state attorney general's office to launch a $500,000 consumer-education advertising campaign in conjunction with the securities industry.

The investigation was prompted by complaints from consumers who were having trouble with online brokerage firms in the first quarter of last year, says Scott Brown, spokesman for the attorney general's office.

"Online trading is growing rapidly and it's here to stay," says Brown. "We're just trying to lay some rules of the road for the industry and consumers."

As a result of the investigation, the Securities Industry Association, based in New York and Washington, D.C., will work with the attorney general's office to educate the public about online trading. The group is planning to spend roughly $500,000 on advertising to educate consumers on their rights and the realities of online stock trading.

The New York report did not name any of the seven online brokerage firms that were investigated, but it did outline several factors that contributed to the online-brokerage performance problems and investor dissatisfaction.

The attorney general's office identified a significant gap between the expectations of online-brokerage-firm customers and the reality of making trades online. Many novice online investors believe the trades are immediate and direct--not realizing they have to go through a series of mechanisms, all of which are subject to failure. The office says part of this gap has been fueled by aggressive advertising campaigns by online firms.

"We're calling for more truth in advertising, so that customers aren't led to believe that you click your mouse and the trade is executed instantly; clearly that's not the case," says Brown.

The report also cited deficiencies in the technology behind the trading. Infrastructure and software limitations were cited as problems for many firms. Essentially, the report says some sites were not able to handle traffic and transactions during peak periods of trading. As a result, the attorney general's office has recommended the industry institute some self-regulation that would require the public to be informed of the technology used on a site. Firms would disclose what they have done to upgrade their infrastructure and capacity to ensure customers that their site will be able to support peak traffic and future demand.

While no legal action has been taken, Brown warns that the state is ready to take action if necessary. "We have the power to sue firms for false advertising, but we're hopeful that it doesn't come to that," he says. "We're pretty confident that firms know that is still an option. We feel it's best for the firms and the customers for us to work together."

We welcome your comments on this topic on our social media channels, or [contact us directly] with questions about the site.
Comment  | 
Print  | 
More Insights
2021 State of ITOps and SecOps Report
2021 State of ITOps and SecOps Report
This new report from InformationWeek explores what we've learned over the past year, critical trends around ITOps and SecOps, and where leaders are focusing their time and efforts to support a growing digital economy. Download it today!
InformationWeek Is Getting an Upgrade!

Find out more about our plans to improve the look, functionality, and performance of the InformationWeek site in the coming months.

Remote Work Tops SF, NYC for Most High-Paying Job Openings
Jessica Davis, Senior Editor, Enterprise Apps,  7/20/2021
Blockchain Gets Real Across Industries
Lisa Morgan, Freelance Writer,  7/22/2021
Seeking a Competitive Edge vs. Chasing Savings in the Cloud
Joao-Pierre S. Ruth, Senior Writer,  7/19/2021
Register for InformationWeek Newsletters
Current Issue
Monitoring Critical Cloud Workloads Report
In this report, our experts will discuss how to advance your ability to monitor critical workloads as they move about the various cloud platforms in your company.
White Papers
Twitter Feed
Sponsored Live Streaming Video
Everything You've Been Told About Mobility Is Wrong
Attend this video symposium with Sean Wisdom, Global Director of Mobility Solutions, and learn about how you can harness powerful new products to mobilize your business potential.
Sponsored Video
Flash Poll