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Technical Glitches Derail NYSE, United Airlines and WSJ; Computer Glitches; No Sign of Malicious Activity; NYSE Computer Glitch Downs All Trading. Aired 1-1:30p ET

Aired July 08, 2015 - 13:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

DANA BASH, CNN CORRESPONDENT: Hello. I'm Dana Bash in for Wolf Blitzer. It's 1 P.M. here in Washington, 6 P.M. in London and 8 P.M. in Jerusalem, wherever you're watching from around the world. Thanks for joining us.

And we begin with breaking news from the New York Stock Exchange. Just after 11:30 Eastern this morning, the exchange halted trading in all stocks, following that the exchange calls technical issues.

[13:00:04] Now, adding to the intrigue, "The Wall Street Journal's" home page stopped functioning about the same time. And earlier today, United Airlines' computer system malfunctioned.

The Department of Homeland Security tells CNN there is no sign of malicious activity in any of these events. The White House press briefing is expected to start at any moment, and we're going to bring that to you as it happens.

But let's discuss all of this. So, we've got our reporters covering this in the seconds that this is happening and things are changing second by second. First, you see Elise Labott, our Global Affairs Correspondent, at the State Department. Also, our Aviation and Government Regulation Correspondent Rene Marsh is here. And from the floor of the New York Stock Exchange, CNN Business Correspondent Alison Kosik.

Alison, let's start with you. It certainly is not the way the floor of the Exchange usually looks at 1:00 in the afternoon in the middle of the day. First, tell us the update about what you're hearing about when it could be back up and running.

ALISON KOSIK, CNN BUSINESS CORRESPONDENT: You know, what, Ashleigh, that's anyone's guess. You walk around and talk with some of these traders, they have no idea. Although, one trader one of my producers talked with speculated if trading doesn't get up and running by 2:30, his thinking, this is from one trader, is that you're seeing business not even happening the rest of the day. We shall see if that actually happens.

The official word from the New York Stock Exchange is that this is a technical glitch that happened at 11:30. Traders that I've talked to said they gotten an indication of some system-wide problem before the opening bell when they gotten an alert from the New York Stock Exchange that included a list of 220 stocks that showed some sort of technical glitch. But that, apparently, was resolved around 10:45 this morning.

And then, you had this other technical glitch or maybe it was related. And then, you had this halt in trading. There really -- you know, there is a sigh of relief that the official word is this is not a cyber attack. But there's also a lot of question as to what happened here in the first place, Ashleigh.

BASH: Hey, Alison, it's Dana. I know -- I've been out there. It's hard to keep track when you're -- when you're doing breaking news. But on the issue of the FBI, they have offered assistance to the Stock Exchange, correct?

KOSIK: I'm Sorry, I didn't hear you.

BASH: The FBI. Tell us about how they're assisting the Stock Exchange.

KOSIK: They have assisted. But, you know, what's interesting is that the Exchange says this is merely a technical issue. In fact, the operations center that is literally here on the floor of the New York Stock Exchange is bustling right now trying to figure out what the problem is, trying to fix it. But, of course, yes, that was offered from the FBI.

BASH: OK, stand by for one minute, Alison, I want to go back into the studio here. Rene Marsh, I have been watching you from your office and everywhere working your sources. Tell us what you know about what the backdrop is here, and particularly when it comes to what happened this morning with United?

RENE MARSH, CNN AVIATION AND GOVERNMENT REGULATION CORRESPONDENT: Right. So, that was a mess. If you were trying to get on, our own Brianna Keilar trying to get on a flight, some 4,900 flights were impacted worldwide, as far as their operations. The problem was a router, essentially, that impacted their computer system. It was not allowing their computers to, essentially, talk to one another. So, you saw a lot of this which is what you're looking at, lines at airports across the country.

We do know, as we speak at this hour, the computer problem has been resolved but the damage is already done. I mean, the delays are happening. People are not able to get to their destinations, as we speak. So, they have to be extremely patient because the system has to get back going. Although, flights are taking off, you know, you have crew members that may have timed out so they have to switch out the crew. It really is one big mess.

I did get some information from a source who says that their investigators have looked into what caused this system-wide breakdown here, this system-wide shutdown, as far as their computer systems. And they have determined that it is not the work of hackers. They say that it is not connected to what happened at the New York Stock Exchange either. They have determined it is solely a technical glitch relate to that faulty router not enabling their computer systems to talk to one another.

So, this source knocking down this idea that perhaps this was a vulnerability, a cyber attack, saying it is not that, at this point.

BASH: OK. At this point, that's the key. Rene, stand by for one minute -- for one minute.

I want to go to the White House where our Jim Acosta is. Now, Jim, you know, we're all -- I don't think you have to be that skeptical of a report to say, wait a minute, the United Airlines, the Stock Exchange, also "The Wall Street Journal," all having these problems in and around the same time. What are you hearing from sources at the White House?

JIM ACOSTA, CNN SENIOR WHITE HOUSE CORRESPONDENT: Right. It's sort of the glitch that roared this morning, Dana. But at the White House, they are not that alarmed by this. They say the president has been briefed on the situation, that White House officials and Treasury Department officials are monitoring the situation.

[13:05:09] But they're saying, for further questions, they refer us to the New York Stock Exchange and the Securities and Exchange Commission. And, as you know, the Stock Exchange, as Alison just said, is saying that this is a technical glitch. United Airlines is saying that this was a computer problem on their end. And, apparently, "The Wall Street Journal" is back up and running.

But as you said, we are a suspicious bunch, Dana. And so, there will be lots of questions asked at the White House press briefing that'll be starting in just a few minutes. Josh Earnest I'm sure will be peppered with questions about this, in part because, Dana, they know a thing or two about hackers here at the White House. The White House has been hacked in recent months by the Russians and potentially by the Chinese.

And so, you know, this is something that they have their eye on. When the North Koreans were accused by this administration of hacking Sony Pictures, this president took it very seriously. Administration policy was changed so that they could go after international hackers in the future with sanctions. And so, they feel like they're armed with what they need to go after hackers if something like that were to break out again.

But, at this point, they just don't believe that this was anything malicious. As the Department of Homeland Security is saying, at this point, they don't believe anything malicious went on. And the FBI, which is offering its assistance, put out a statement saying that no law enforcement activity is required, at this time.

So, that's an indication there, from a law enforcement standpoint, that they believe along with just about every other aspect of the federal government here that this was a glitch, a big glitch, at the Stock Exchange and United Airlines and "The Wall Street Journal" -- Dana.

BASH: OK, Jim, thank you for that report. And we're going to be watching the White House briefing and you and others peppering the White House press secretary about this very issue. And I want to go back to the State Department to CNN's Global Affairs Correspondent Elise Labott. Elise, you have been following stories like this for some time, and, you know, we know that the Chinese have been accused of hacking the government and others. What are you hearing about -- you know, everybody is saying glitch, glitch, glitch along the way? But, again, it's kind of hard to imagine that all of these glitches happened at the same time. What are you hearing from their sources?

ELISE LABOTT, CNN GLOBAL AFFAIRS CORRESPONDENT: Well, they're saying glitch, glitch, glitch. And they all seem terribly coincidental right now. But I think the level of concern by the administration is obvious by the fact that the president has been briefed on this, that the FBI did reach out to the New York Stock Exchange, and by the fact that the Treasury is monitoring, the State Department is monitoring. Everybody is keeping an eye on this even though they don't -- they think these are technical glitches right now, you have to look at the climate that this country is in right now, in terms of hacking.

Jim just eluded to the fact that, recently, U.S. government computers were hacked, believed to be by China, thousands of U.S. employee personnel records and security records were hacked into. This country is very vulnerable right now. And you remember last year with the Sony attack. So, this is what hackers do, in fact. They try to create fear in the public, in the markets and that's why everybody is keeping such an eye on this. Right now, they're saying it's no glitch. These are just coincidental whacky technical glitches but it would -- I wouldn't be surprised if you look, in the next couple of days, that they find something -- Dana.

BASH: OK, Elise, thank you very much. We're going to get back to you as you continue your reporting over there. And we're going to talk more about this now with Tom Fuentes. He is CNN's Law Enforcement Analyst and former FBI assistant director. Tom, United Airlines says it was a router problem. The New York Stock Exchange says it's not a cyber breach. You're an investigator. If you were there right now at the FBI investigating, what would you be looking for?

TOM FUENTES, CNN LAW ENFORCEMENT ANALYST: Well, what they'll be doing, Dana, is it's more than just the FBI making a phone call and saying, are you guys OK? Thanks. We're here, never mind. It's they closely monitor and work very closely with these institutions and industries because they're part of the U.S. national critical infrastructure. We're talking aviation. We're talking our financial markets. We're talking mass communications with newspapers.

And what they're looking at, in cases like this, is trying to determine if it was any kind of an external attack in any way on those systems which even could just be a test pink by another country or an organized crime group for a prelude to war or an extortion where they're just testing to see if they can shut it down. If they can get into the system or was it just a piece of hardware internally, a router went bad or something else happened and it's all coincidental that we've had three of these in one day.

So, they're looking very closely at this. This isn't just casual phone calls over to these companies to see what happened. They are very closely investigating.

BASH: And what is your -- I'm going to put you on the spot here. What is your sense? You are -- it's your job to be as skeptical as we are as reporters. The fact that all of these big, big, big organizations had glitches at pretty much the same time, does that make you think that it was just a coincidence or maybe it's something more?

[13:10:15] FUENTES: Well, I'll put it this way, my job as an investigator and as a supervisor of investigations was to not form an opinion too early because, then subconsciously, you'll try to prove yourself right. So, --

BASH: Yes.

FUENTES: -- I think we don't have enough information yet to really say, yes, it looks like how can it be this coincidental? But I think it's just too early. Let's look at all of these systems. What actually happened internally with each of these companies and their I.T. systems to determine what happened.

BASH: And, Tom, I want to go back to a point that Elise was making, an important one, which is regardless, even if this is just a coincidence, it is a reminder of how vulnerable we all are, whether it comes to government computers, our personal information, to a cyber attack. In fact, coincidentally, the Homeland Security secretary Jeh Johnson is giving a piece is on cyber security that was planned before, as we speak. I mean, this should be a wakeup call, as if we needed that, right?

FUENTES: No, we shouldn't need it. And this is something -- you know, I dealt with this when I was still in the FBI. This goes back to the early 1990s. The fear of information warfare and the fear that the U.S. is the most vulnerable country in the world, because we're the most reliant on our computer systems. And we always worried whether it was an organized crime group or an attack for another country that somebody that malicious with a class A team of hackers, like some countries have, if they could shut our systems down, aviation, the power grid, the water pumping, communications, our satellite systems, if they could shut that down, they could turn the United States into Somalia. And that was always the fear and it still is the fear and the effort to prevent anything like that from being possible.

BASH: Absolutely. It is all very, very scary. Tom, I want you to stand by and our reporters as well who are still working their sources. We're going to let them do that. We're going to follow the breaking news from the New York Stock Exchange. But we're going to take a quick break. And while we do, remind you that all trading has been suspended because of a computer glee -- computer breach, rather. And we're awaiting a briefing from the White House. We're going to have much more after this break. Stand by.

[13:12:23]

(COMMERCIAL BREAK) [13:16:26] BASH: And we're back with breaking news about what they are calling computer glitches almost simultaneously at "The Wall Street Journal," the New York Stock Exchange, and United Airlines. And just before coming back before the break, the Homeland Security secretary, who happened to have been giving a speech on this topic, cyber security, at this hour, said about this issue, he does not believe that they are a result of a nefarious actor. He said that they know less about "The Wall Street Journal" than about New York Stock Exchange and United Airlines. And we're going to be getting that for you and turning it around for you as soon as we can.

And while we're going to be doing that, I want to go back to our business correspondent, Alison Kosik, who, again, is on the floor of the New York Stock Exchange right now, which, as we said, is not trading and hasn't been for almost two hours.

Alison, you have a guest there. Tell us who you have and what's happening there?

ALISON KOSIK, CNN BUSINESS CORRESPONDENT: OK, Dana.

We're here with Keith Bliss. He is a trader here on the New York Stock Exchange floor. I wanted to bring him in to get a little bit more idea about whether or not you saw any indication of any kind of technical glitch before the halt.

KEITH BLISS, SENIOR VICE PRESIDENT, CUTTONE: Not right before the halt. You know, all of a sudden the music just stopped playing and we had to kind of redirect and call customers and do other things. But we did have a technical malfunction this morning before the open, which is not that uncommon. We see that every now and then. There may be a module inside of the system that may go blank and they send out a notification. So that happened on about 220 stocks this morning. That would have been the only indication. But there as -- we didn't think that that was going to lead to a halt or a technical malfunction later in the session.

KOSIK: Did the New York Stock Exchange just put in software? Could this be something related to new software from the New York Stock Exchange?

BLISS: Yes, I mean, everybody needs to understand, the New York Stock Exchange has to roll out new software updates constantly. Sometimes many times during the week, whether it's regulatory changes or rule changes or how we handle the stock trading here on the floor. That's my understanding is that they did come out with an update last night. They rolled it out. It's unclear at this point whether that actually caused the malfunction. But I'm sure that's one area that they're looking at right now to see if that was the primary cause.

KOSIK: In the past, when the stock exchange has rolled out new software, have there been glitches in the past, even small?

BLISS: Yes, not -- not that I've ever seen. Now, the specialist, the designated market makers as we call them today, they're the ones that would be on the front lines for any of those software updates because when they do that, that's the systems set the impact. We use systems in the brokerage community and what I do from other vendors, so they're the ones that would have seen it. I've not heard of them having problems in the past, but, again, it's software and software can malfunction and the software that they use down here in handling orders from around the globe and making sure that orders can be represented appropriately, not only in this market but in the U.S. markets is incredibly complex. So it's not unreasonable to think that something may have gone wrong there.

KOSIK: So at this point it's really anyone's guess when everything here at the exchange will be back online. Is there a chance that trading may just not happen the rest of the afternoon?

BLISS: There's always that chance. The New York Stock Exchange has assured us that they're going to try and get things back online. The timing that I've heard is around 2:30, between 2:00 and 2:30 this afternoon. It's a very long outage for an intrasession -- intraday session like that. But we think that we'll be back online. The most important thing is, as you probably reported, most of the buying happens at the beginning of the day and the end of the day. So we want to have this primary market back open at least for the last half hour of trading.

KOSIK: How can this sort of upset the apple cart or change the sort of algorithms of the trading when the stock exchange does get back online? Has it just sort of -- is it a seamless process?

BLISS: I'm not sure it's going to be a seamless process and algorithms are different and there's just literally hundreds of thousands of them out there that operate within the markets right now. Most -- a lot of the algorithms that are used in the market today sniff out liquidity, where the most liquidity and the best price is. So when the New York Stock Exchange comes back online, for the majority of stocks that are primarily listed here in this market, the liquidity should come back into the market based primarily on how the designated market makers do their job. So they will -- they will redirect orders here.

[13:20:14] KOSIK: Trading is still happening. You're not seeing any panic about this?

BLISS: No, not at all. If you look at the markets, I mean we've traded down for things that are happening in China and the Greece situation still unfolding. But, no, there's no panic in the markets right now. We're trading at a couple critical levels. I'm actually impressed over the last couple of weeks at the resiliency of our markets. And you are -- that is an important point, Alison, you are able to represent your orders in the marketplace given the market structure that we have. There's interconnected markets. Most stocks that are primarily listed here in the New York Stock Exchange do trade in the other markets, so you can find liquidity somewhere.

KOSIK: OK, trading happening elsewhere, Dana, just not happening here at the New York Stock Exchange. Dana, back to you.

BASH: Thanks, Alison. Before I let you go, I want to ask a follow-up about, you know, kind of the -- you talked about algorithms, but then there's also just kind of the feel of the stock exchange and what happens when markets get spooked. Your trader there said that he didn't think that they were going to get spooked, but, you know, you never know when it comes to stocks and people stocks and people might be looking at this thinking, my money's in my 401(k), it's in the stock market. You know, if this kind of thing can happen, maybe I need to take my money out. Are you hearing some of that concern from any other traders there or experts on the floor?

KOSIK: I'm not hearing that. And, Keith, you're not hearing about anyone being spooked about this technical glitch. Any chance that when trading does resume we may see maybe some volatility because of what's happened here at the stock exchange today?

BLISS: You know you can't -- you can't predict what the behavior's going to be for everybody. Certainly nobody down here is panicked or spooked. As I've been telling you, some of my colleagues today, if we got spooked or panicked by something like this, then we're in the wrong business. I mean we deal with things that are a far greater risk and importance I think than something like this. So, no, I don't see anything. We may see some volatility when we reopen stocks or maybe some people that just get spooked and want to pull out of the market, but I think most professional investors and traders will not be spooked by this. They'll come back and the markets will run normally.

KOSIK: Very strange to stand here, though, Dana, on the exchange floor and not see the numbers moving. It's very odd.

BASH: It looks very odd. And people might not be spook, but it looks spooky, I have to tell you, from the outside looking in. Thank you both for that. I appreciate it.

KOSIK: You got it.

BASH: And I now want to bring in Jane Lute, who is a former deputy secretary for the Department of Homeland Security, now the CEO for the Center for Internet Security.

And, Jane, let's just first get your reaction to what's happening at the New York Stock Exchange and also this morning at United Airlines and at "The Wall Street Journal."

JANE LUTE, FORMER DEPUTY SECRETARY, DEPT. OF HOMELAND SECURITY (via telephone): Well, thanks, Dana.

I think you've been touching on all the key points. I mean the first point is, is that the first reports are always wrong when you get the facts and know what's happened. Very often people see a dot, they think an incident, two dots is a line, three dots is a trend and maybe all we have here are three dots. So we need to know more.

I can say also that the chances in the United States of America and our economy today that you'll have multiple episodes concurrently of glitches and outages and even cyber-attacks is 100 percent. So this is -- this is life as we know it today.

BASH: So are you saying that you do think is it, you know, completely plausible that this is just coincidence or are you skeptical that it's coincidence?

LUTE: No, I'm -- no, I mean these episodes seem -- appear to have been reported concurrently and may have happened concurrently.

BASH: I see.

LUTE: That doesn't mean they're related and it doesn't mean it's malicious.

BASH: OK. One last question before I let you go. If you were still in the government, at the Department of Homeland Security, or now with, you know, clients dealing with Internet security, what would you be looking for and what would you be telling your clients?

LUTE: Well, we would -- we would be looking for signs that there -- there was something malicious happening here, but so far there doesn't appear to be, as we've heard from officials.

There's not an enterprise that -- in our marketplace that delivers value without relying on IT and access to the Internet? So we would be emphasizing and reminding people that this is a point where they need to be undertaking basic cyber hygiene that prevents 85 percent of what we know causes attacks and we would be remind -- using this opportunity to remind people of the importance of basic cyber hygiene to really change the game in terms of vulnerability for cyber events.

BASH: Basic cyber hygiene. That is a 2015 term. Thank you so much, Jane Lute, for joining us on the phone.

And I now want to talk more about the global impact of this. This program is being seen around the world. So joining me from CNN International business desk is correspondent Maggie Lake.

Maggie, trading was shut down just at the New York Stock Exchange, but talk about global consequences.

MAGGIE LAKE, CNN BUSINESS CORRESPONDENT: Yes, and, Dana, it's really the timing of this that's problematic. This is hitting a market that is already nervous about so many other things, primarily Greece and the debt crisis there, whether they're going to leave the Eurozone or be forced out. And also China, Chinese stock markets have been incredibly volatile, in freefall over there, and many shares suspended in trading there. So global investors already sort of unnerved, uncomfortable and selling and now see something happening in the U.S. which, frankly, we don't see very often.

[13:25:24] As Keith mentioned, this is a long outage for the New York Stock Exchange. Almost two hours very soon. You can bet officials there want to try to make sure that they have this resolved so when they do open, they're able to open smoothly. Keith is right, that is a very busy part of the day. Even for investors who are not sitting in the U.S., it is a high volume time, that last two hours on the New York Stock Exchange. So they want to make sure, if they open, they can get it done.

But this is going to hurt confidence of investors who not only have all these current worries, but have been through an awful lot. The financial crisis, the flash crash, a lot of them losing a little bit of faith that they can actually trust when they put a trade in it's going to get executed. So it is a concern, but not something we're likely to see last through this day if they can get back open and get that closed, Dana.

BASH: You know, and that's -- and that's what I was trying to get at with Alison about the idea that, you know, people who are really schooled in this -- the stock exchange, people who work there every day might say, you know, OK, let's get over this and move on. But people out, you know, in middle America, people in all parts of the world might be saying, well, wait a minute, if my life savings is there and a computer can do this, maybe I should rethink where I have my money. And, you know, it might just be a brief thing, but it might be enough to really get people worried.

LAKE: No, absolutely. It's real and it is something that officials, I'm sure, are very conscious of. Listen, this is showing whether it is a computer glitch or something more serious, it's showing, once again, how vulnerable these markets are. And, Dana, after 9/11, you know, I saw, and we all reported on the massive money and effort that went into putting contingency plans in place so the markets could be secure and immune from any kind of shutdown. This shows that despite everything that happened, there still is much work to do to make sure that you don't have a suspension of trade. So investors are right to be nervous.

I will say for all those concerns, you don't want to do anything today in the heat of the moment. This is not the time to get involved to try to sell. You just need to sit back, let this pass, let the professionals handle the reopening and then sit down with a cooler mind and figure out how you feel about your investments. But I think it is an issue, that this is going to be another blow to confidence.

BASH: Maggie Lake, thank you. That's very sound advice. Appreciate that.

And we're going to continue to monitor these three major computer glitches derailing the New York Stock Exchange, "The Wall Street Journal" and United Airlines. And we're awaiting a briefing from the White House. We'll bring that to you live when it happens.

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