The U.S. Securities and Exchange Commission (SEC) was sued on April 16, 2024, over the implementation of the Consolidated Audit Trail (CAT), a system designed to gather complete trading data from U.S. exchanges.
This lawsuit has been filed by the New Civil Liberties Alliance (NCLA) on behalf of investors and the National Center for Public Policy Research to challenge the constitutionality of CAT, claiming violations of several constitutional amendments and federal statutes.
Disadvantages of the CAT System
The plaintiffs argue that the SEC has overstepped its regulatory authority by establishing the CAT without particular consent from Congress. This database, intended to keep a record of all the equity and options transactions in the United States, is accused of infringing the privacy rights because of the necessity to store huge volumes of personal financial data for a long time.
The complaint argues that such actions do not comply with the First, Fourth, and Fifth Amendments, ensuring
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