“There are many legitimate reasons an individual would not want their financial transactions to be regularly submitted to a government registry. The SEC has failed to appreciate and address these concerns that CAT collection of PII presents.”
WASHINGTON – Sen. John Kennedy (R-La.), a member of the Senate Banking Committee and the Appropriations subcommittee on Financial Services and General Government (FSGG), which oversees the Securities and Exchange Commission (SEC), and Sen. Katie Britt (R-Ala.) today wrote Gene Dodaro, Comptroller General of the U.S., seeking an investigation and report by the Government Accountability Office (GAO) on the potential risks, constitutional issues and privacy concerns presented by the SEC’s Consolidated Audit Trail (CAT).
“Since Rule 613 was adopted, the CAT has gone through several operational delays while market participants, SEC commissioners, and members of Congress have continued to raise concerns over the continually growing costs related to CAT implementation,” the senators wrote.
“However, the top concern related to the CAT remains the collection of personally identifiable information (PII) of every investor that trades a single share of stock on a U.S. exchange. This information will be collected and stored in a vast database that will be subject to cyberattacks and which presents concerns about the privacy and protection of Americans’ sensitive personal information,” they continued.
“Even more concerning, the CAT poses fundamental threats to protections from ‘unreasonable search and seizures’ under the Fourth Amendment. The courts have previously held that the mandated production of certain information can violate the Fourth Amendment. There are many legitimate reasons an individual would not want their financial transactions to be regularly submitted to a government registry. The SEC has failed to appreciate and address these concerns that CAT collection of PII presents,” the lawmakers explained.
Background:
- Kennedy introduced the Protecting Investors’ Personally Identifiable Information Act to protect information that could reveal the identity of American investors by prohibiting the SEC from requiring brokers to submit investors’ information to the CAT.
- Kennedy also raised concerns with SEC Chairman Gary Gensler about the privacy and national security threats that the CAT poses.
The full letter is available here.