The Securities and Exchange Commission cannot let stand the Nasdaq OMX Group's bungled handling of its late-August trading outage, former SEC Chairman Harvey Pitt told CNBC. He spoke before Thursday's meeting between federal regulators and the chief executives of the major stock exchanges.
"What was shocking about the recent Nasdaq outage was the fact that it was the second such incident in very short period of time for Nasdaq," Pitt said in a "Squawk Box" interview. "It seemed as if there was no crisis management plan in action, and there had been not effective planning for that event."
Mary Jo White, the SEC chairwoman, scheduled the Thursday forum two weeks ago to address the Aug. 22 computer trading glitch that effectively shut down the Nasdaq stock market for more than three hours. The problem was in the public data network that carries the quotes and trades for Nasdaq, known as the Securities Information Processor (SIP).