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Legal View with Ashleigh Banfield
All NYSE Trading Halted; United Balmes Computer Glitch for Downed Systems; Wall Street Journal Site Also Facing Tech Glitch. Aired 12-12:30p ET
Aired July 08, 2015 - 12:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
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[12:00:29] ASHLEIGH BANFIELD, CNN ANCHOR: Hello, everyone, I'm Ashleigh Banfield.
And this is breaking news coming to you via many computer glitches seemingly happening at the same time. Our breaking news from Wall Street right now -- all trading briefly stopped on the New York Stock Exchange just minutes ago, appearing to be because of a technical glitch rather than what we're used to hearing, say a financial problem. Nonetheless, the Dow is down sharply at this moment.
This coming just after hearing most of the morning about United Airlines suffering a major computer glitch that stopped much of its operations. "The Wall Street Journal," for its part, suffering some kind of a glitch that is heavily affecting its website as well. This is what you see when you try to go to "The Wall Street Journal" website. A very unusual message.
I want to start, though, at the top, and that's at the New York Stock Exchange. Let's go straight to Alison Kosik, who's reporting live there right now.
Is trading back and resuming and do we know anything more about what happened?
ALISON KOSIK, CNN BUSINESS CORRESPONDENT: Trading here at the New York Stock Exchange has halted. It is not happening. Business here is frozen, has been frozen now, Ashleigh, for about a half hour. This is about a technical glitch. This isn't a regulatory halt. It's nothing that had to do that we can tell with a fat finger, but we don't want to speak to early on that.
Traders are telling me that before the opening bell rang this morning at 9:30, the New York Stock Exchange actually gave out a list of many, many stocks about possibly problematic stocks. Now, what they mean by that I'm still trying to figure out, but they included stocks across a wide range. They included Kate Spade, Nordstrom, Korea Electric Power. These were some of the companies on this list that the New York Stock Exchange distributed before the opening bell to the traders here in New York here at the New York Stock Exchange, but then came this halt in trading.
Now, the trader I talked with said he doesn't know if there's a -- if the two issues are connecting -- connected, meaning the halt now and the list of stocks that the New York Stock Exchange handed out before the opening bell today. But as we speak, 30 minutes and counting. Business has stopped here at the New York Stock Exchange but trading is still going on at the Nasdaq.
Ashleigh.
BANFIELD: All right, stand by for one second, if you will, Alison. I just want to read a statement that came out just in the last few moments from the New York Stock Exchange via a spokesperson. And it says, "we're currently experiencing a technical issue that we're working to resolve as quickly as possible. We will be providing further updates as soon as we can and are doing our utmost to produce a swift resolution, communicate thoroughly and transparently and ensure a timely and orderly market re-open."
Alison, just quickly to you. I began this broadcast suggesting this is not the major -- or the first major computer glitch that's caused a problem today. United Airlines has suffered vastly for the last several hours and now "The Wall Street Journal" suffering as well. Is anyone at the stock exchange talking about those issues and seeing if there's perhaps any correlation?
KOSIK: They're not connecting the dots on those issues. I do think it's interesting how the New York Stock Exchange flagged many stocks before the bell even rang. I'm wondering if this is an isolated technical glitch compared to the others that you're mentioning. I do think it is interesting that that document went out this morning.
BANFIELD: OK, hold that thought for a moment, if you will. I want to bring in Rana Foroohar, who's our CNN global economic analyst, as well as Paul La Monica, our CNN Money correspondent.
First to you, Paul. Clearly your offices must have been buzzing as well, especially when you saw "The Wall Street Journal" go down as well. What are you hearing from your sources?
PAUL LA MONICA, CNN MONEY DIGITAL CORRESPONDENT: It sounds so far, as Alison pointed out, that this is probably just a technical glitch, but you do have to ask the question, United, their computer systems go down. "The Wall Street Journal," the preeminent financial news site, their site is now down as well. Is there a connection? I don't know if we can reasonably say that there is, but there are so many stories every day about this company getting hacked, other companies getting hacked. Cyber security is a huge issue right now and many companies are not as protected as they should be.
BANFIELD: And, Rana, let's just talk about the effect of all of this.
RANA FOROOHAR, CNN GLOBAL ECONOMIC ANALYST: Yes.
BANFIELD: The actual financial losses that we may not hear or see right now but they're happening.
FOROOHAR: Yes. They could be significant. You know, 80 percent of trading is done by a computer algorithm. This increases volatility. So when you get a glitch like this, you can just have billions of dollars in losses.
This is also coming at a time when China's markets are in freefall. There's a big stock market crash --
[12:05:07] BANFIELD: And frozen this morning, right?
FOROOHAR: And frozen this morning. Europe is in a debt crisis right now. Greece is a problem. So all three legs of the global stool are quite wobbly right now.
BANFIELD: And I just want to make a mention here that the Department of Homeland Security has weighed in right now and they are saying at this point there are no signs of malicious activity at this point, but we're going to continue to monitor as to whether that changes as well.
And as you heard off the top of this broadcast, the NYSE trying to re- open but so far not re-opening. And you can see on your screen that nothing's effectively moving much. We're down 200 on the Dow Jones. The Nasdaq still trading, though.
I want to bring in Maggie Lake, who's our CNN international business correspondent.
We're just trying to sort of make sense of a lot of things that are happening at the same time. And as you were just coming up to the set, I was asking Paul and Rana about this coincidence or not of "The Wall Street Journal" website going down, United Airlines going down, at the same time the New York Stock Exchange saying a computer glitch has brought down the stock exchange as well. What are you knowing or hearing?
MAGGIE LAKE, CNN INTERNATIONAL BUSINESS CORRESPONDENT: You know, I think that we don't know what's happening. We have no indication that these are connected. But what matters is investor psychology, right?
BANFIELD: Yes.
LAKE: They are all talking about the fact that, is this a coincidence? And it's that confluence of events that always unnerves people. It's never just a moment where you see anyone getting into trouble. It's when you have several things happening at the same time. It's going to be a confidence issue.
But I think it's really important to point out, and veteran traders on the floor are saying this, we have seen this before. Even before we had computers, we had telephones and we had ticker tape. They also failed. We had timeouts and then we resumed. This is a very, very sophisticated market when it comes to getting itself smoothly back up on its feet.
So, you know, there are a lot of questions to be asked and this is going to unnerve people. It's also important to point that out. They already have a plan in place for when they re-open. So, you know, it's not a situation where anyone would -- should panic. If they have trades pending, they will let you know what happens. So we've been here before, but -- FOROOHAR: Yes, but confidence is the issue. That's what you said earlier. And, you know, when you've got the China market collapsing, people are looking to the U.S., oh, this is supposed to be the safe market, everything's supposed to run smoothly, and then you have this happening at the same time. Not great.
BANFIELD: Although I want to be super clear about China, that is because of this 30 percent freefall of the -- of the stock prices in China.
FOROOHAR: Absolutely.
LA MONICA: Exactly.
FOROOHAR: Absolutely.
BANFIELD: That is entirely driven by financial crisis in China this morning.
FOROOHAR: Yes, that's right.
BANFIELD: So let's not connect that at all. This -- what I think has a lot of people concerned is this very bizarre coincidence of three major organizations stuffing some kind of computer glitch.
I'm going to ask you when we come back from the break, all three of you if I can, about flagging these problematic stocks, whether that makes any difference to all of this and also that the DHS has come in and said at this point that there's no sign of malicious activity at this point because a lot of people would ask, could this possibly be a test run and not perhaps malicious yet. So we'll think through those questions in a moment and we'll be back right after this.
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[12:11:15] BANFIELD: Welcome back. Our breaking news. I want to welcome our viewers in the United States and around the world.
There are three major problems going on right now in the United States and they all have to do with computer glitches and they are all terribly important. What you're seeing on your screen right now is effectively a halt in trading on the New York Stock Exchange. The word from the exchange is that it is a glitch, a computer glitch of some kind that they are working feverishly to remedy.
"The Wall Street Journal" as well, for its part, this is what you see when you log on to its website. Clearly some kind of glitch because that is not "The Wall Street Journal" website.
And then, also within the last several hours, United Airlines reporting major problems, computer problems, that really brought a halt to a lot of their operations as well. Many of the agents actually handwriting some of their ticketing today again because of some kind of computer glitch.
Now, at this point, we are not clear at all if there is any connection between all three of these major United States organizations and the problems that they are having, but it certainly does give pause, so much so that even the government is weighing in on this saying, hold fast, we're not getting any report or any thought at this point that there's anything malicious going on.
But I want to go to Rene Marsh, our aviation correspondent, who's standing by live right now in Washington, D.C., with more on this story regarding United.
I asked Alison Kosik, Rene, down at the New York Stock Exchange, whether anyone there is talking about the other problems that are going on with the other organizations and she's not hearing that. Is United hearing about what's going on elsewhere and are they bring that into their fold as well?
RENE MARSH, CNN AVIATION CORRESPONDENT: That's unclear. I know that they are currently trying to work out the rest of the kinks. I actually just a second ago received a statement from United kind of fleshing out a little bit more regarding what was behind this massive computer issue. And in their words they say, "an issue with a router degraded" -- well, it's not that statement that we have up here. This one just came to me here, guys. So it's an issue with a router degraded network connectivity for various applications causing the issues. So it sounds like there was a router, a problem with their router, which affected the way the computers were able to communicate with each other. So that's the new nugget that I've just received from United.
But this was massive. I mean we're talking about 4,900 flights that were affected worldwide. So this went beyond the United States. And all of them had to be grounded for a couple of hours before they were able to get those systems back online. And now we know from United that there was this issue with a router that degraded the network connectivity, so how their computers were communicating with each other.
And we know just the makeup of these systems that there's several computers that have to talk to one another in order for certain information to make its way from the pilots, from the cockpit back to the ground, and so there are a lot of potential vulnerabilities for failure, essentially, and that's what we saw happen this morning.
BANFIELD: Everything back to normal, though, for United right now?
MARSH: For the most part, yes. I mean flights are still taking off at this point, but just because this computer issue is resolved, it doesn't mean that the problem is solved. The damage essentially has been done. We're going to see a ripple effect. There are delays. They now have to worry about this issue of crews that may have run out of hours, so they have to replace crews. Planes aren't where they should have been, so you're talking about other delays for missed connections. So the headache is only beginning now.
[12:15:01] So, yes, the problem has been resolved, but there's problem number two, which is probably a larger problem where passengers are going to still be dealing with delays. This could last the rest of the day. It could bleed over into tomorrow before things get back to normal and people can get to their destination. The airline understands that. They are now offering waivers to flyers just to make things easier for them so that they don't have to pay for a change fee because of this mess due to this computer problem.
BANFIELD: All right, our Rene Marsh reporting live for us in Washington. Thank you for that.
And as you look on your screen and it says computer glitches hit the NYSE, the New York Stock Exchange, United Airlines and "The Wall Street Journal," the NYSE is a big, big problem for a lot of people. That can send jitters right across the globe, in fact. And it's something that's even important enough for the Department of Homeland Security to weigh in on.
First, before I get to that topic, though, I want to read a tweet for you, if I can, that was sent out by the New York Stock Exchange, and it's one of two from what I -- I'm going to read it live as I get it, so bear with me. "We're experiencing a technical issue that we are working to resolve as quickly as possible. We're doing our utmost to produce a swift resolution and will be providing further updates as soon as we can." Really it echoes a department -- or an NYSE spokesperson's statement that came out just a short time ago as well saying that we're experiencing a technical issue, trying to resolve it as quickly as possible, providing further updates so that we can do our utmost to provide swift resolution, communicate thoroughly and transparently and ensure a timely and orderly market re-open.
Our justice correspondent Pamela Brown is standing by live in Washington.
There is a reason, Pamela, that these statements and tweets are coming out fast and furiously.
PAMELA BROWN, CNN JUSTICE CORRESPONDENT: Absolutely.
BANFIELD: Thirty-five, 45 minutes now almost of this stoppage on the NYSE can have global ramifications and the government has taken note and is already talking about this. What is the Department of Homeland Security doing and saying about this?
BROWN: Well, right now, Ashleigh, we can tell you that the Department of Homeland Security is saying that it doesn't appear at this point that there was a malicious attack affecting the New York Stock Exchange and also these other issues we're seeing with United, as well as "The Wall Street Journal." But they're saying at this point it just looks like major software glitches that we're looking at right now.
But, Ashleigh, I can tell you that immediately when this happened, this caught the attention of federal law enforcement, of Department of Homeland Security officials, particularly those who deal with cyber issues, because they're acutely aware of the threat we face, the hacking threats. We just saw it recently with the major OPM hack where, as U.S. officials believe, Chinese hackers were able to steal data from millions of people. So, of course, this caught their attention, but at this point,
Ashleigh, the belief is that this was just a big software glitch that we're seeing. And it's ironic that it's all happening around the same time, but they don't see any reason to believe that this is a malicious attack at this point. And, of course, that could change.
Ashleigh.
BANFIELD: All right, Pamela, keep an eye on it for us and alert us just as soon as there's any change, if there is any change, from the DHS.
In the meantime, back to the New York Stock Exchange right now where our business correspondent Alison Kosik is standing by live.
KOSIK: You have updated reporting for us, Alison?
KOSIK: I do. And as you said, we are watching the clock. Stock -- trading here at the New York Stock Exchange has been halted about 45 minutes now. Trading just stopped. Everything is frozen. I walked down there. I'm above the floor right now of the New York Stock Exchange. I went ahead and walked on the floor to talk to some traders. They're just playing video games at this point wondering when trade willing resume. They're just as surprised that this happened as we are, but sort of.
And I say sort of because before the opening bell rang, the New York Stock Exchange sent the traders here at the New York Stock Exchange a note with a PDF of 220 stocks of what were considered problematic stocks. Meaning these were stocks where you couldn't send in an order, whether it was to buy or sell. And these stocks run the gamut. They're retail stocks. They're carpentry stocks. They're automotive stocks. They're all over the place.
And one of these -- the traders that I talked with said that he saw problems in -- talking about technical problems, before the bell rang, saying that there was a problem with the data feed. That systems weren't reading New York data. That it was kind of a hairy situation this morning, but then everything went off well. The thinking is that, you know, once these list of stocks, possibly one of these stocks that traded may have, quote, "tripped the wire" and caused this technical problem that we've come to now, Ashleigh.
BANFIELD: All right, Alison, stand by for a moment, if you will, because we are sort of juggling these three stories. You can see on the bottom of your screen, the New York Stock Exchange, United Airlines and also "The Wall Street Journal." All three organizations suffering some kind of computer glitching that has caused either stoppage or severe disruption in their operations today.
[12:20:02] I'm told that "The Wall Street Journal" is now partially back up and running. I don't know if we still have that shot. If you go to thewallstreetjournal.com, it had a big "oops" and it did not look very official. It certainly looked like a big problem had befallen "The Wall Street Journal." "Oops, 504!" I forgot the 504. Something did not respond fast enough. That's all we know. So now apparently the page looks like this. At least there's no
"oops." Some people are seeing the white page and other people when they log on are actually seeing this page that you see on your screen right now, which looks -- look, I can't read the small print in the best of times with these eyes and I certainly can't read it on the TV screen, but it looks, at least for all intents and purposes, like things may be up and running, the headline, "trading halted on the NYSE." That's certainly a most recent headline as well.
LA MONICA: Look like (INAUDIBLE) story pages are.
BANFIELD: I want to bring in Paul La Monica. So I know you've got your sources.
LA MONICA: Yes. (INAUDIBLE).
BANFIELD: Has anybody been able to talk about "The Wall Street Journal" at least?
LA MONICA: Well, "The Wall Street Journal," it does look like it's the home page. You had that 504 message and then it became blank but I don't know if you want to focus in on that or not. This is the actual story about the market being halted right now. So people are able --
BANFIELD: Is it updated?
LA MONICA: It is updating. Trading halted on NYSE. So clearly the WSJ site is not entirely down. So that, I guess, is one potential positive there. But we have no idea why their home page went down.
BANFIELD: So when -- here's what -- here's what, Paul, it looks like when you refresh. It looks, and for all intents and purposes, like the standard -- you know, the standard issue except for the top line, wallstreetjournal.com is having technical difficulties.
LA MONICA: Right.
BANFIELD: There's a little more to that line (ph) as well.
LA MONICA: Yes, it's normal if you're going through --
BANFIELD: The full site will return shortly.
LA MONICA: Yes.
BANFIELD: There you go.
LA MONICA: You're going through a search engine or social media, you can get individual stories it looks like.
BANFIELD: The individual stories. But if you still go to wallstreetjournal.com, you're going to get the blank page for the most part.
LA MONICA: The blank page, exactly.
BANFIELD: So, Rana, I mean, for a while there, when we started this broadcast, it was -- it was a little worrisome --
FOROOHAR: Yes.
BANFIELD: That there were these three extraordinarily coincidental --
FOROOHAR: Yes.
BANFIELD: And maybe, I'm just using the word coincidental, maybe not, but at this point it looks pretty coincidental that these three major American organizations were suffering from computer problems.
FOROOHAR: Yes. And, you know, it really brings up the fact of just how dependent trading is on computerized systems. You know, 80 percent of all trading is done through computer programs. When technology goes down, it can move global markets. I mean I have no doubt that that probably will happen once the systems come back up and we're going to see some big corrections.
BANFIELD: And now that this system -- we're now at, you know, let's see, 52 minutes, I think, since things froze, Maggie. The reverberation, I can't imagine, haven't reached global markets.
LAKE: Oh, no, they will. And you know I think what's worrying here, Ashleigh, and this is a conversation that's going to happen at the New York Stock Exchange, after 9/11, so much effort was put in to make sure that there were contingencies that something couldn't knock the market off line. I mean they spent months and millions of dollars doing that. And I think there was a great deal of confidence.
And, in fact, the New York Stock Exchange was standing up pretty proud when the Nasdaq had computer glitches. The fact that it can go offline like this and that it is still vulnerable despite all the efforts, even on a federal level, that the market is vulnerable to a computer shutdown like this has got to be a warning shot.
BANFIELD: Because --
LAKE: Security experts have always worried about this.
BANFIELD: Yes.
LAKE: But now we all know it.
BANFIELD: And isn't that effectively what the NYSE trumpets itself as being --
LAKE: Right.
BANFIELD: Sort of impervious to this kind of cyber terror?
LAKE: But I will -- I will tell you --
LA MONICA: But they've had problems before, even if it's not crime or terror.
LAKE: Yes. LA MONICA: They have had glitches. We had the flash crash in 2010 when you had some high-profile companies that went down to a penny per share.
LAKE: Yes.
LA MONICA: If you remember that, it was insane.
BANFIELD: And not crime and terror related.
LA MONICA: And it wasn't crime and terror, it was just an actual fat finger sort of glitch that we have all been hearing about.
FOROOHAR: Yes, problematic.
LAKE: The difference we're going to see today though, is when they go to reopen, there are human beings that Alison said are playing video games right now waiting to see what happens. But those human beings are professionals and they will help the market open in an orderly way. You won't -- when it's just left to computers, you're all going to flood once it reopens again. This is why they always say you still need human beings at the controls.
LA MONICA: That's right.
BANFIELD: Yes.
LAKE: And those floor traders will help.
BANFIELD: I'm going to go to break and I'm going to tell our viewers in a moment we're going to go back to the New York Stock Exchange, but you have to settle something for a lot of people who are watching their screen and seeing numbers constantly moving.
LAKE: Yes.
BANFIELD: We were at, you know, minus 200. Now we're at minus 193.82, but we're frozen. How does that work?
LAKE: Because there are still -- and Paul can talk to this too -- there are still other platforms that are working. The Nasdaq is up and running and it trades NYSE-listed stocks. You have ARCA (ph), FACT (ph), other computer -- computer platforms that are still working.
LA MONICA: You have -- you have (INAUDIBLE). Apple -- Apple, Microsoft, Intel and Cisco are huge companies in the Dow that trade on the Nasdaq. That's why they're still moving.
BANFIELD: So the -- so the Dow numbers are just -- yes, and they are just reflecting that.
LA MONICA: So not everyone on Wall Street is playing Candy Crush Saga.
LAKE: The entire system is not shut down. There is still trading going on. BANFIELD: And just so that everybody with a 401(k) out there who's
freaking out at this point, those numbers that you're seeing on your screen solely reflect every other index, not the NYSE's index.
LAKE: That's right.
BANFIELD: It is frozen shut and there is absolutely no movement anywhere.
LA MONICA: If there's any comfort here because you are still seeing the Dow move and other stocks are moving, you haven't really seen that much of a pullback since the trading halt. This was a bad day to begin with that had nothing to do with any of the glitches.
[12:25:04] FOROOHAR: Yes. And --
BANFIELD: OK.
LA MONICA: Greece, China. So things haven't gotten worse.
FOROOHAR: Right.
LA MONICA: But, you know, that's small comfort.
BANFIELD: Oh, thanks for that.
LA MONICA: Yes.
BANFIELD: Small comfort.
LA MONICA: Yes.
BANFIELD: Paul La Monica, you're just the hero here, aren't you? Thank you.
Stay -- stay here, if you can. I do have a couple of other questions. After the break, I want to ask certainly more about the NYSE and when will it get back up online because, you know, 50 minutes is massive, especially when you do microtrading these days. Back after this.
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BANFIELD: Our breaking news as we approach the bottom of the hour, it has been almost one hour since the New York Stock Exchange effectively froze in place. I want to welcome our viewers here in the United States and around the world. I'm Ashleigh Banfield.
We're covering not only the breaking story of the New York Stock Exchange suffering some kind of computer glitch that brought trading to a halt, but also computer glitches that have massly affected two other major organizations in the United States -- United Airlines that for some time this morning brought down dozens upon dozens of planes, and, in fact, had to start issuing boarding passes by handwriting them. That ground stoppage was a major effect, in fact. And we're told now that things are back up and running at United Airline but that the reverberations will take some time to actually shake out because, of course, as you know, the connections, et cetera, will all be affected by what happened at United Airlines. And, again, a computer glitch the reason for that ground stoppage.
[12:30:06] And then if you can see on your screen, the New York Stock Exchange and United were joined by "The Wall Street Journal" as well. Anyone trying to log on to thewallstreetjournal.com
