Republicans in Congress are pushing back on what some consider another front on the surveillance state—in this case, the Securities and Exchange Commission’s collection of investors’ personal data.
Rep. Barry Loudermilk, R-Ga., is the lead sponsor of the Protecting Investors’ Personally Identifiable Information Act, which would restrict the SEC’s automatic collection of investors’ personal identifiable information, with a goal to eliminate the potential for breaches.
“We’ve had extreme government overreach from the SEC,” Loudermilk, a member of the House Financial Services Committee, told The Daily Signal. “The agency has violated the 4th and 5th Amendments. Any stock transfer from a Robinhood account has to go to this brokerage report.”
Robinhood is a commission-free electronic trading company.
The SEC established the Consolidated Audit Trail, or CAT, in 2021, designed to track order and trade activity in U.S. markets. The audit trail is a joint project of the securities exchanges and the Financial Industry Regulatory Authority.
The audit trail links specific transactions to individuals using information like their full name, address, and date of birth. The audit program is not funded through Congress and not subject to congressional oversight, Loudermilk said.
He recalled his surprise when President Joe Biden’s SEC Chairman Gary Gensler said data is broadly collected to monitor for oddities.
“If a sheriff went by a local bank to say he wanted to peruse all bank customer records just to see if something unusual pops up, the bank president would tell him to get a warrant,” Loudermilk said.
The SEC estimated in 2019 about 3,000 individuals would have access to the CAT. Loudermilk’s office said that’s more than the Consumer Financial Protection Bureau with about 1,600 employees. Further, Loudermilk contends that adversarial state actors such as China could benefit from having access to each individual investor’s entire market history.
Neither the SEC nor FINRA immediately responded to inquiries for this story.
Gensler addressed the program during House testimony in September 2023, saying, “It’s only allowed to be used, this Consolidated Audit Trail, at the SEC and the self regulator organization.”
At that hearing, Loudermilk asked if the audit trail can be used for enforcement purposes. Gensler replied, “We have already. We anticipate we will in the future.”
Loudermilk responded: “You’re saying the Consolidated Audit Trail is a comprehensive database of transactions used for federal enforcement purposes but it is not subject to congressional oversight or through appropriations. This is shaping up to be another surveillance program without any restraint.”
Rep. Ann Wagner, R-Mo., is another House sponsor of the bill.
Sen. John Kennedy, R-La., introduced a Senate version.
“Americans assume their private information is secure when they invest money in the U.S. stock market,” Kennedy said in a public statement. “However, the SEC’s unlawful Consolidated Audit Trail could put their data in jeopardy. My bill would protect American investors from foreign enemies and bad actors by preventing the SEC from collecting personal information it doesn’t need and storing it on a dangerous database.”
Fred Lucas is chief news correspondent and manager of the Investigative Reporting Project for The Daily Signal.
Reprinted with Permission from The Daily Signal – By Fred Lucas
The opinions expressed by columnists are their own and do not necessarily represent the views of AMAC or AMAC Action.
Congress has a lot to do and so far they are getting precious little actually done. I can understand the Democrats will support none of this legislation, but the Republicans have to step up the direct pressure on the Democrats by outlining how the Democrats are willfully obstructing everything. Less photo ops and useless committee hearings and more real work. The American people are looking for results not just talk!
I remember when my mom went to the bank to withdraw money to cover the cost of a large home repair. They wanted to knowq everything about her….She was 80 years old and the bank said the federal government made them ask theese questions: *what is the money for, *hows much, *where is this money coming from, and *what is your job (they wouldn’t accept that she was retired)-I told them she was a stripper. Talk about the banker teller getting all red and embarrassed. (Yeah, and my mom punched me all the while she was laughing)..,she had been a bus driver, a swimming instructor, and a Sunday school teacher. The bank was on the lookout for me when my mother had me request funds for her.