Kennedy, Cotton, Scott call on SEC to review Consolidated Audit Trail
Senator John Kennedy from Louisiana, along with Senators Tom Cotton from Arkansas and Tim Scott from South Carolina, have united with their colleagues in advocating for a thorough assessment of the Consolidated Audit Trail (CAT) by the acting chairman of the U.S. Securities and Exchange Commission (SEC), Mark Uyeda. The CAT mandates that brokers disclose investors’ personally identifiable information (PII) to its database. In response to this requirement, the previous SEC administration under President Trump issued an order exempting specific PII elements, such as investors’ names, addresses, and birth years, from being reported to the CAT.
The lawmakers, in a letter addressed to Mark Uyeda, emphasized the magnitude of concerns surrounding the CAT and commended the recent efforts by Commissioner Peirce and the SEC in safeguarding the financial privacy of American investors. Despite these positive steps, they highlighted the need for further actions. Specifically, they emphasized the importance of enshrining the ban on collecting investor PII in official regulations rather than relying on rescindable exemptions. Furthermore, they underscored the necessity of eradicating the already collected PII, enhancing cybersecurity protocols for the remaining data, and reevaluating the CAT’s inflated budget.
Recognizing the persistent apprehensions related to the CAT, the senators proposed a comprehensive review encompassing all facets of the system. They recommended the temporary suspension of contentious elements within the CAT, encompassing not only the collection of customer PII but also the debatable funding structure opposed by a majority of the current Commission. Additionally, they suggested that a pause in ongoing litigation tied to the CAT, similar to actions taken with cases initiated during President Biden’s administration, would be a prudent course of action.
In the course of these deliberations, Senator Kennedy introduced the Protecting Investors’ Personally Identifiable Information Act earlier this month. This proposed legislation aims to bar the SEC from mandating market participants to submit investors’ PII to the CAT. Furthermore, the bill advocates for the deletion of personally identifiable information once the SEC resolves the underlying investigation or issue necessitating the data provision.
Complementing Senator Kennedy’s efforts, other lawmakers including Senators John Boozman and Bill Hagerty, along with Representatives French Hill, Bill Huizenga, Ann Wagner, and Barry Loudermilk, have signed onto the letter urging the SEC to reassess the CAT comprehensively. In light of these developments, it is evident that a multilateral effort is underway to address the myriad concerns surrounding the CAT and ensure the protection of investors’ sensitive information in the financial landscape.
