The SEC Wants to Spy on Your Portfolio

livemint.com:

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.