The Consolidated Audit Trail will record your Social Security number and all your stock trades. By Warren Stephens and Paul C. Reilly Sept. 24, 2023 4:49 pm ET As an American, you have a right to privacy—unless you own stock. The Securities and Exchange Commission has created a centralized database to track the personal and financial information of every U.S. investor. Congress should immediately stop this unconstitutional power grab. The scope of the Consolidated Audit Trail, or CAT, a regulation the SEC issued in 2016 but implemented only recently, is breathtaking and unprecedented. In the words of the SEC press release, the regulation instructs regulated financial institutions to identify “every order, cancellation, modification and trade execution for all exchange-listed equities and options across all U.S. markets.” The SEC issued this rule in response to the 2010 “flash crash,” ostensibly to surveil markets. If the CAT stopped at that, it would have been a useful tool to protect markets from fraud and manipulation. But the commission decided to collect American investors’ personally identifiable information, such as account and Social Security numbers, and share it. The CAT data will be available to self-regulatory organizations, such as stock and options exchanges, and about 3,000 outside contractors as well as to the SEC itself. We objected to this expansion of the database, and so did many others, including the American Civil Liberties Union. Why should the government, without any evidence of wrongdoing, surveil Americans’ balances to see every trade they make? Before CAT, regulators needed legal cause and a subpoena to force a financial firm to divulge a customer’s personal and financial information. As leaders of financial firms with millions of customers across the U.S., we dedicate significant resources to protect customer data and oppose any policy that erodes the personal liberties of Americans safeguarded by the Fourth Amendment. We also share SEC Commissioner Hester Peirce’s concern that hackers may try to exploit the CAT “for their nefarious ends.” The urgency of this threat is clear from the repeated cyberattacks on numerous U.S. government institutions in recent years by hackers backed by China, Russia and North Korea. We expressed these concerns to the SEC for years and have been ignored, but some in Congress share our objections. Rep. Barry Loudermilk and Sen. John Kennedy recently introduced legislation to stop the unconstitutional collection of U.S. investors’ personal information by the CAT. We hope other lawmakers will follow their lead. Regardless of political party, safeguarding Americans’ privacy should be ample reason to take action. The SEC is a securities regulator with a three-part mission: to protect investors; to maintain fair, orderly and efficient markets; and to facilitate capital formation. It doesn’t have the legal authority to supersede the Constitution and spy on ordinary Americans’ portfolios. Letting it seize that authority anyway could lead to the addition of a fourth, sinister mission part: to judge investor virtue. The CAT will give the SEC a window into the core values of every American investor. Those values span the political spectrum. As political activism plays a larger role in investing and regulatory agendas, will investors whose holdings don’t reflect the values or beliefs of those in power have reason to fear retribution? Americans have always had a right to privacy and protection from government overreach, thanks to our Bill of Rights and hundreds of years of legal precedents. This legacy has motivated Americans to resist any form of personal surveillance. Our customers have a right to invest without fear—and without the SEC peering into their portfolios whenever it feels like it. Mr. Stephens is chairman, president and CEO of Stephens Inc. Mr. Reilly is chairman of the American Securities Association.
%% THEY sure dont need to do that=that window should have closed in 1984+ better late that never=close that snoop door. I do like the way SEC did a bear move[reduction ] on SEC fee. Good job on that SEC cutting fees......................................
I doubt it. The most interesting part of the book " The Death of Money" is where the author talks about his previous work in market surveillance and using it to predict acts of terrorism. As soon as they mentioned that it could also be used to detect insider trading, they got shut down. I have no doubt that it would be used to target a few non politically connected types, but you're dreaming if you think they're going after pelosi or those corrupt fed employees. They would use this to protect their insider trading edge from anybody who isn't paying the "big guy".
And when, not if, SEC servers are in control of N. Korean hacking groups, it will be a goldmine. I've used SEC websites quite a bit and they are buggy for the simplest of things. Serious doubts about security if basic user interface doesn't work.
The SEC is a joke. I don't even know why its still around. The current head of the SEC is too busy trying to make sure that a BTC spot ETF never sees the light of day. I guess he doesn't have time to check the markets for malfeasance. Let's face it if you were good at data analysis, why would you work at the SEC and not some wall street firm? My father used to work for the DOD (Defense) and it was also full of idiots who didn't do any work.
I always thought that "public company" was a term also applied to its shareholders - i.e. the shareholder list was public. This "street name" holding version is all a bit silly, and if your broker fails then you join the queue to hopefully get your shares back. Direct shareholding avoids all of that.
Are you freaking kidding me? Is this the level of privacy you provide your clients? 1) Freedom from unreasonable search is a founding principle of American democracy. 2) People need to learn to mind their own damn business. If the government believes they have a legitimate need for information they can always get a warrant. You can bet this information will be used for criminal purposes by the government, just like how the last 3 repubs to run for president had tax information leaked.
%% USa is founded on a limited gov; not bribing citizens-slaves with quote '' free junk'' unquote. At least the SEC cut fees + would to God all agencies would do that. NPR did whine about a gov shutdown would keep many from going into gov=that could be a good thing LOL