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Industry Spotlight > Broker Dealers

Group Sues SEC Over Collection of Investor Data

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SEC headquarters (Photo: Shutterstock)SEC headquarters (Photo: Shutterstock)

The American Securities Association is suing the Securities and Exchange Commission and has filed to stop the collection of investors’ personal identifiable information through the Consolidated Audit Trail, or CAT.

Ron Kruszewski, ASA’s chairman and CEO of Stifel Financial, said in a statement that while the association supports the SEC’s implementation of CAT, it “firmly believes that the collection of investors’ PII into a centralized database is an unnecessary and substantial risk to the privacy of American investors.”

CAT is a regulatory reporting tool commissioned by the SEC and being developed by the Financial Industry Regulatory Authority.

“There can be no reasonable cost benefit analysis which supports risking investors’ privacy, especially when this data is currently available today on a when-needed basis,” Kruszewski explained.

The lawsuit, he added, “is not about market surveillance, but instead about protecting the privacy of American investors.”

In the suit, the ASA requests an alternative approach to the CAT’s generation of a customer ID that does not require broker-dealers to report individual clients’ Social Security or taxpayer identification numbers to the CAT.

They also ask for an “alternative approach which would exempt the reporting of dates of birth and account numbers associated with natural person retail customers.”

ASA CEO Chris Iacovella added that while the group has supported CAT’s creation, “as we have said repeatedly, this can be accomplished without collecting the personal information of every mom-and-pop American investor and storing it in a one-stop-shop for cybercriminals who want to steal their identities.”

The group also launched “to mobilize all American investors to help stop the collection of their most sensitive personal information,” the group said.


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