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Lawsuit Filed Against SEC to Protect American Investor Privacy

ASA launches, a nationwide grassroots movement mobilizing all Americans to help stop the collection of retail investor data by the Consolidated Audit Trail (CAT) database

WASHINGTON – The American Securities Association (ASA) filed a legal challenge against the Securities and Exchange Commission (SEC) to protect America’s retail investors from identity theft and safeguard their right to privacy by stopping the collection of any of their personally identifiable information (PII) by the CAT database. ASA also announced the launch of, and released a new digital ad campaign, to mobilize all American investors to help stop the collection of their most sensitive personal information.

“The ASA supports the implementation of the CAT and believes it will be beneficial to our securities markets,” said ASA Chairman and Stifel Financial Corp. Chairman and CEO Ron Kruszewski. “However, the ASA firmly believes that the collection of investors’ PII into a centralized database is an unnecessary and substantial risk to the privacy of American investors. 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. This lawsuit is not about market surveillance, but instead about protecting the privacy of American investors.”

“The ASA supported the creation of the CAT to surveil the markets, but 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,” said ASA CEO Chris Iacovella. 

“We are filing this lawsuit because the voice of the American people and Members of Congress who do not want the Commission to collect retail investor PII must be heard. We are proud to stand up for the privacy rights of every American investor and we look forward to mobilizing the American people through our My Data My Vote nationwide grassroots movement.”

ASA CEO Iacovella first outlined the lawsuit in a Wall Street Journal op-ed.

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 400 insider trading cases between FY2011-2019 (averaging over 44 per year). These numbers clearly illustrate that (1) the SEC has no issue in bringing insider trading cases against individuals who violate its rules, and (2) collecting retail investor will needlessly subject millions of American investors to identity theft by cyberhackers for no regulatory benefit.

The CAT can surveil the marketplace and better understand market structure just as effectively by giving IDs to every corporate actor in our markets including financial institutions, hedge funds, asset managers, insurance companies, high-frequency traders, and other large traders.

According to a 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. In addition, leading Members of Congress have called on the SEC to remove retail investor PII from the CAT. A group of Senate Republicans sent a letter to the SEC highlighting the CAT’s national security risks. Senior members of the House Financial Services Committee also sent a similar letter.

ASA has been at the forefront of advocacy to remove retail investor PII from the CAT. ASA CEO Chris Iacovella penned an op-ed in The Hill titled “The National Security Risk No One Is Talking About.” To read our letter to the SEC, click here. To read our 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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