Washington, D.C. – U.S. Senator Katie Britt (R-Ala.) is an active participant in the Senate Committee on Banking, Housing, and Urban Affairs and has teamed up along with senator John Kennedy (R-La.) to demand for the Government Accountability Office (GAO) investigate the possible security risks, constitutional concerns as well as privacy concerns that have been raised through the Securities and exchange Commission’s (SEC) Consolidated Audit Trail (CAT).
The CAT system, created to monitor the trades that occur across American markets and has been operating for over a decade providing regulators with valuable data on trade activity and information about investors. information. But, in the huge amount of data gathered by CAT, there is one major issue: personal identifiable data (PII) of each investor who trades on U.S. stock exchanges. The gathering of this sensitive information can raise significant privacy issues for the consumer, since it could be used to build a detailed overview of an individual’s trading habits and is susceptible to data security breaches.
In a letter addressed directly to Gene Dodaro, the Comptroller General senators Britt as well as Kennedy have demanded a thorough GAO investigation to examine certain key aspects of CAT that include the legality and constitutionality of the CAT’s collection of financial and personal data and the cyber-security risks that are associated with security vulnerabilities in the CAT database, as well as estimates of the number of people who have access to the data inside the database.
The Senators have expressed their concern regarding the CAT’s collection PII in light of the possibility of threatening Fourth Amendment protections against “unreasonable searches and seizure.” The requirement for the production of certain data according to the Fourth Amendment, has previously been the subject of legal debate. The Senators argue that there are valid reasons to not want their financial transactions to be regularly reported to a public registry and believe that they are of the opinion that SEC has not sufficiently dealt with these concerns.
The GAO’s upcoming report that was requested by senators Britt and Kennedy will explore various critical aspects:
– A study of the legality and constitutionality of obtaining American investors financial and personal information by a regulator within central databases without proof of misconduct. A look at the security vulnerabilities in cyberspace that are related to security issues in the CAT database.
Estimate of the number of individuals who regularly have access to the information collected by the CAT program and their professional affiliations as well as the screening or background checks that are used through The SEC as well as FINRA to ensure that only those with access to the data in the CAT database.
A complete list of cyberattacks that have been publicly reported on federal government agencies during the last three years as well as an analysis of the compromised or possibly damaged American investor’s PII and the costs associated with the repair of the identities of those affected.
A review of all legal organizations retail investors might be accountable for cyberattacks on the CAT should incident result in loss of American investors their account numbers, identities or securities and an analysis of the potential cost in light of the previous data of identity theft.
The Senators have requested a reply from the GAO by November 15, 2023, highlighting how important this question. The joint effort of senators Britt and Kennedy highlights the importance of ensuring the privacy rights and the rights guaranteed by law to American investors in this digital age.
