ASA Urges SEC to Eliminate Personal Data Collection by the Consolidated Audit Trail

WASHINGTON – The American Securities Association (ASA) today submitted comments to the Securities and Exchange Commission (SEC) on its Concept Release on the Consolidated Audit Trail (CAT), urging the Commission to permanently eliminate the collection of "Customer and Account Information System" (CAIS) data, abandon the "Customer and Account Identifier" (CCID), and to destroy all personal data already collected.

"The CCID is not a technical workaround that solves the personal data problem, it is the problem," said ASA President and CEO Chris Iacovella. "The government has no more right to attach a permanent financial tracking device to every American investor than it does to track their physical movements without cause, and this Concept Release should be the beginning of the end for the CATs unlawful surveillance of Americans."

“Compelled disclosure of every investor transaction stitched together by a permanent government identifier and accessible to thousands of users creates a concrete chilling effect. Investors who know that every trade in firearms manufacturers, cannabis companies, or ESG funds is permanently recorded and government-accessible may avoid those securities entirely, suppressing financially-expressive conduct that the First Amendment protects. The CCID does not merely record expression after the fact, it deters it in advance,” said Iacovella.

The letter notes that “the Commission's approach to the CAT is unnecessary, harmful, and illegal.” ASA specifically argues that the CAT's stated goals of market surveillance, event reconstruction, and market analysis can be fully achieved using order-level data tied to firm-side account identifiers, without collecting any investor's name, address, date of birth, Social Security number, or other personal information. The letter notes that broker-dealers already maintain account-level records and can quickly respond to targeted regulatory inquiries, making a permanent, government-generated tracking identifier unnecessary for any legitimate regulatory purpose.

The letter also raises significant legal concerns, arguing that the CAT's data collection and the CCID violate the Fourth Amendment's protection against unreasonable searches, exceed the Commission's statutory authority, raise non-delegation concerns, and infringe on constitutional privacy and First Amendment rights.

ASA's letter further highlights the escalating cybersecurity threat posed by the CAT, pointing to recent breaches of the U.S. Treasury Department and major U.S. telecommunications companies by Chinese state-sponsored hackers, and warns that the CAT would represent the single most valuable target for foreign adversaries seeking to compromise American investors' financial data. The letter also calls on the SEC to determine the CAT's legality, perform a full financial audit of its costs, and move the system onto the SEC's own budget before approving any new funding model.

To read ASA's full letter, click here.

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The American Securities Association (ASA) represents the retail and institutional capital markets interests of regional financial services firms who provide Main Street businesses with access to capital and advise hardworking Americans how to create and preserve wealth. ASA’s mission is to promote trust and confidence among investors, facilitate capital formation, and support efficient and competitively balanced capital markets. This mission advances financial independence, stimulates job creation, and increases prosperity. The ASA has a geographically diverse membership of almost one hundred members that spans the Heartland, Southwest, Southeast, Atlantic, and Pacific Northwest regions of the United States.