Former SEC Chairman: NYSE Didn't Handle Trading Halt 'As Well As They Should Have Been Able To'

The 3 1/2 hour trading halt at NYSE on Wednesday has spooked many investors and several conspiracy theories relating the incident to a plot by terrorists or hackers have been cropping up.

Harvey Pitt, former chairman of the U.S. Securities and Exchange Commission, was on CNBC Thursday to discuss if NYSE could have handled the trading halt in a better way.

The Issue: How Prepared Are The Exchanges?

"I don't think the issue is really with the regulators; the issue is with the exchanges," Pitt said. "My mother had a mantra, she said, 'sometimes even the inevitable occurs' and in this case it proves that fact. So, exchanges have to be prepared for this and the real issue is how prepared was the NYSE and how effective were the steps they took. That's the issue."

NYSE Didn't Handled The Situation Well

Pitt was asked how well he thinks the NYSE handled the issue. He replied, "I don't think they handled it as well as they should have been able to. For one thing, they didn't put out immediate information about what the probable causes were of the outage. That led people to speculate that maybe there was terrorist activity involved."

"This deprives the markets of confidence and is something that has to be avoided.

Second, when they finally did tell people when the markets would be up, they announced everything on Twitter. That's a rather curious choice for a public company. Twitter is fine, but there needed to be a much broader dissemination and release of information," Pitt concluded.