Congress Must Hold SEC Accountable to Prevent Identity Theft

The NSA was hacked by the Chinese cyber army, so the idea that American investors should trust the SEC to protect their personal information from these same hackers is absurd




WASHINGTON – Ahead of today’s Senate Banking Committee hearing on the status of the Consolidated Audit Trail (CAT) database, the American Securities Association (ASA) called on Congress to use its oversight authority to hold the Securities and Exchange Commission (SEC) accountable and prevent identity theft of America’s retail investors.


“The SEC can get the CAT database up and running without collecting any amount of retail investor personally identifiable information,” said ASA CEO Chris Iacovella.


“The NSA was hacked by the Chinese cyber army, so the idea that American investors should trust the SEC to protect their personal information from these same hackers is absurd. American investors saving for retirement shouldn’t have to worry about having their identity stolen, and no amount of government-promised data masking or encryption will be enough to protect our country and maintain investor trust and confidence. We thank Chairman Crapo, Senator Kennedy, and members of the Committee for holding this important hearing and either the SEC will come to its senses quickly or Congress should force them to.”


According to a recent nationwide Morning Consult survey, 72% of investors are not willing to put their personal information at risk in order to facilitate more insider trading cases, while 76% favor being allowed to ‘opt-out’ of having their PII collected under a system such as the CAT. There is growing momentum in Congress calling on the SEC to remove retail investor PII from the CAT. In July, a group of Senate Republicans sent a letter to the SEC highlighting the CAT’s national security risks. Leading members of the House Financial Services Committee sent a similar letter in April.


The collection of retail investor PII in no way bolsters the ability of the SEC to oversee equity markets more effectively as the Commission has brought over 387 insider trading cases since FY2011. ASA believes the CAT can surveil the marketplace and better understand market structure just as effectively by giving IDs to financial institutions, hedge funds, high-frequency and other large traders. Retail investors did not cause the flash crash.


ASA has been at the forefront of advocacy to remove retail investor PII from the CAT. ASA CEO Chris Iacovella recently penned an op-ed in The Hill titled “The National Security Risk No One Is Talking About.” To read our recent letter to the SEC, click here. To read our recent letter to the Senate Banking Committee, click here. To view a Morning Consult poll showing an overwhelming majority of American investors oppose sending their personal information to the CAT, click here.



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