Jun 16 2022
WASHINGTON—Sen. John Kennedy (R-La.), a member of the Senate Appropriations subcommittee on Financial Services and General Government (FSGG), which has jurisdiction over the Securities and Exchange Commission (SEC), today raised concerns with Chairman Gary Gensler about privacy and national security threats that the Consolidated Audit Trail (CAT) poses.
“The most obvious and necessary step the SEC can take to is to eliminate the collection of all PII under the CAT. Collecting and storing PII serves no regulatory purpose, it’s unconstitutional, and the SEC’s ability to monitor potential risks in the equity market will not be diminished without PII,”explained the senators.
The CAT is set to begin collecting the personal and financial information (PII) of every investor that trades on U.S. stock exchanges this July. It will be one of the largest databases of PII ever created.
“Collecting the sensitive personal and financial information of individuals without any suspicion of wrongdoing is a clear violation of the Fourth Amendment protection against unreasonable searches and seizures. Forcing broker-dealers to provide this information under threat of significant penalties compounds this unlawful government surveillance,” they continued.
In October 2019, the Senate Banking Committee also learned that about 3,000 individuals will have full access to the PII collected by the CAT. The lawmakers note that this raises the possibility that employees of the SEC, Financial Industry Regulatory Authority or contractors working with the CAT could steal or misappropriate investor PII.
In April 2021, Kennedy introduced the Protecting Investors’ Personally Identifiable Information Act to prohibit the SEC from requiring that PII be collected under CAT reporting requirements.
FSGG ranking member Sen. Cindy Hyde-Smith (R-Miss.) and Sens. Jerry Moran (R-Kan.) and John Boozman (R-Ark.) also signed the letter.
The full letter is available here.