“Wall Street kicked into high gear for fall after Labor Day last week. But thousands of brokers at Wachovia Securities LLC — and their customers — were stalled,” writes Carrick Mollenkamp in today’s Wall Street Journal.

“The problem: glitches as the brokerage firm’s computers went haywire just as Wachovia Corp.’s Wachovia Securities and the former Prudential Securities, which merged their stock brokerages last year, for the first time started using a single technology system, people familiar with the matter say.”

“At 10:15 a.m. EST Tuesday, about 5,000 brokers, sales assistants and other employees, or about a third of the Wachovia operation, were blocked from logging on to their computers. As the week wore on, the technology breakdowns escalated, with many frustrated brokers unable to view clients’ accounts, place trades or wire funds from their computers without using a backup system.”

“ ‘Make no mistake, this has been…emotionally and physically exhausting,’ James Donley, head of Wachovia’s private-client group, said late Friday afternoon in a taped conference call broadcast to brokers. ‘I’ve been through a few of these mergers in the past. And I know many of you are probably angry, some of you might be fearful….The bottom line is this: We ran into technology challenges that we didn’t anticipate…. We expect more — and you certainly deserve better.’ ”

“A Wachovia spokesman said the breakdowns weren’t the result of integration difficulties, but coincidental computer malfunctions that would have happened regardless of the merger. The spokesman said the operations were working without problems as of yesterday.”

“Some big bank-merger deals of the late 1990s were marred by technology glitches, making some executives and investors more skeptical of business combinations. More recently, however, some bank deals have been driven by executives’ desire to use technology to save money by streamlining operations. Technology advances, for the most part, seemed to make integrating computer systems seamless. The Wachovia woes show that technology glitches, even if unrelated to a merger, can shake the confidence of front-line employees.”

“In striking a deal with Prudential Financial Inc. to combine brokerage forces, the Charlotte, N.C., bank was seeking new heft as it sought to take on stock-brokerage leaders such as Merrill Lynch & Co. Wachovia’s new army of about 11,000 brokers rivals that of Merrill, which had 14,000 financial advisers as of June 25. Wachovia holds a 62% stake in the combined entity, and Prudential owns the rest.”

“Wachovia had planned for the combined technology platform to go live last Tuesday. But by week’s end, according to insiders who have been briefed by the bank’s management, Wachovia had to shut down some of its functions as it continued troubleshooting.”

“That prevented many brokers from using computers for routine tasks such as creating new accounts and wiring money. They had to carry out many such functions manually, by faxing or calling the brokerage firm’s headquarters in Richmond, Va., or areas of the bank that handle certain transactions. Tony Mattera, a Wachovia spokesman, said the bank was able to complete all customer transactions.”

“The technology snafus could dent Wachovia’s hard-earned reputation for skillful technology changes. Formerly named First Union, it won kudos when it acquired the old Wachovia in 2001. From a war room, the bank mapped out every step, and it went off without a hitch. In addition, its planned merger with SouthTrust Corp. is expected to use technology and back-office integration to wring a large chunk of the forecast $414 million in annual pretax cost savings.”