The Securities and Exchange Commission is watching you
The Securities and Exchange Commission is deploying a massive government database—the Consolidated Audit Trail, or CAT—that monitors in real time the identity, transactions and investment portfolio of everyone who invests in the stock market. As SEC Commissioner Hester Peirce describes it, by allowing the commission to “watch investors’ every move in real time," CAT will make it easier to investigate insider trading or market manipulation. But as a lawsuit being filed Tuesday in Texas federal court makes clear, CAT crosses a constitutional red line.
Accepting this sweeping surveillance would eviscerate fundamental privacy protections. That a few bad apples might engage in misconduct doesn’t justify mass surveillance of everyone’s private affairs. The SEC conceived of CAT during the Obama administration.
Now, without congressional authorization and under the radar of most Americans, the commission is trying to impose it by executive fiat. CAT will reportedly be the single largest government database targeting the private activities of American citizens. The SEC can deal with potential market manipulation by focusing on the transactions of large institutional firms without sweeping up data on millions of small retail investors.
Nevertheless, the agency is requiring every broker to feed into CAT in real time every securities transaction along with every investor’s personal information, including name, address and birth year. With a keystroke, more than 3,000 government employees and contractors from the SEC and more than 20 other regulatory bodies will be able to see the personal investment activities of tens of millions of Americans. This invites abusive investigatory fishing expeditions, targeting of individuals, and
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