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SEC’s CAT Database Violates Constitutional Rights

This inconvenient reality renders the Commission's proposed rule constitutionally untenable.




WASHINGTON – The American Securities Association (ASA) sent a comment letter to the Securities and Exchange Commission (SEC) outlining several constitutional, privacy, and data security concerns associated with the Consolidated Audit Trail’s (CAT) collection of every American investor’s personal and financial information. In the letter, ASA highlighted how collecting this unprecedented amount of data will cause extraordinary harm to American investors while achieving minimal regulatory benefits.

“ASA has long supported the creation and implementation of the CAT to surveil our securities markets, but this can be accomplished without trampling on the constitutional rights of every mom-and-pop American investor,” said ASA CEO Chris Iacovella.

“The Commission's proposed rule would violate the Fourth Amendment right to privacy by forcing the disclosure of every investor’s financial information, personal information, and transaction history without any evidence of wrongdoing,” Iacovella wrote in the letter. “This inconvenient reality renders the Commission's proposed rule constitutionally untenable."

"A broad, diverse coalition of market participants and civil liberty advocates agreed that there was no benefit - and significant potential harm - from personally identifiable information being collected under the CAT."

In the letter, ASA strongly urged the Commission not to collect any of the data elements it proposes to collect through “Customer and Account Attributes,” citing the following constitutional and legal concerns:

  1. Collecting “Customer and Account Attributes” would be arbitrary and capricious.

  2. Collecting “Customer and Account Attributes” violates the Fourth Amendment.

  3. The Commission has no statutory authority to collect “Customer and Account Attributes.”

  4. The non-delegation doctrine prevents the Commission from collecting “Customer and Account Attributes.”

  5. The proposed rule is unlawful because the structure of the SEC violates the separation of powers.

  6. The proposed rule would violate the constitutional right to privacy and the First Amendment.

  7. Collecting “Customer and Account Attributes” would violate the E-Government Act.

In May, ASA filed a lawsuit—first announced in a Wall Street Journal op-ed—against the SEC to protect American investor privacy and launched MyDataMyVote.com, a nationwide grassroots movement mobilizing all Americans to help stop the collection of retail investor data. ASA withdrew its lawsuit after the SEC issued this request for public comment, allowing the American people to make their voices heard.



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ASA’s regional financial services companies work in communities across the country to create jobs, grow the economy, and increase prosperity for all Americans. The ASA exclusively represents the capital market and private client interests of its members and seeks to promote free market principles making it easier to access financial advice and capital. ASA members help Americans save for retirement, provide Main Street businesses with capital to grow, and advise hardworking Americans how to create and preserve wealth. For the latest updates follow @AmerSecurities and learn more at http://americansecurities.org/.

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