Morgan Stanley to Remediate Clients Affected by Outage

March 26, 2020

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Morgan Stanley Wealth Management is “making adjustments” to clients who lost access to their accounts on Wednesday, a spokeswoman said.

The outage, which began around 11 a.m. and also affected the standard order-routing process used by the firm’s advisors, was resolved around 3:30 p.m., she said, attributing the problem to a bug in third-party software. She declined to name the software or its functionality.

Brokers were able to route trades through a back-up system, but the redundant system was “slow,” the spokeswoman said. She declined to elaborate how trade “remediations” will be calculated and allocated, or the number of clients who may have been affected.

“In defense of Morgan Stanley, the clients will get the best price,” said one advisor in a southwestern state who spoke on condition of anonymity. “Management is busy cleaning up trades.”

The system collapse amid the chaos of the coronavirus crisis was disturbing, three other advisors said, particularly because stocks on Wednesday were broadly rebounding after weeks of volatility and declines. But most said that the order-routing glitch was a relative non-event since they have been urging clients to refrain from bottom-fishing and from cashing out their accounts. Not being able to review accounts, however, was problematic for them and customers, they said.

The outage was not related to systems capacity, Morgan Stanley said on Wednesday, but it did come as almost all of its 15,500 brokers have been working from outside their branch offices as a result of the pandemic and nationwide shelter-in-place orders from local government.

The Morgan Stanley systems issue was the most prominent that has emerged since virus concerns emerged. However, Bank of America’s Merrill Edge suffered a 20-minute outage on Wednesday late in the trading date that affected client account access for self-directed customers on the East Coast, a company spokesman said.

Robinhood Markets, which offers no-commission stock trades, suffered outages earlier this month as trading volume overwhelmed capacity. It began offering remediation credits this week to customers who said they lost money by being locked out of the markets.

After dropping more than 30% from its February peak, the S&P 500 gained almost 11% over this week’s first three trading days.

—Jed Horowitz contributed to this story.

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