The federal government built a system that records the lawful trading activity of tens of millions of Americans, invades their financial privacy, and makes investors pay for the surveillance. The Securities and Exchange Commission (SEC) calls it the Consolidated Audit Trail, or CAT. Now the agency is considering "fundamental changes" to the setup. It should eliminate the system instead.
CAT, launched in 2020, records almost every order, modification, cancellation, and execution by tens of millions of investors. The SEC requires these records so regulators can search trading activity and reconstruct it long after a trade occurred. The records are collected before there is probable cause, reasonable suspicion, or even an allegation of wrongdoing. Lawful activity is gathered first and searched later. Even the SEC has acknowledged that CAT raises civil liberties, privacy, confidentiality, and cybersecurity concerns.
