ASA Letter: SEC Can Protect Investors Without Collecting Personally Identifiable Information

WASHINGTON – The American Securities Association (ASA) today sent a letter to the Securities and Exchange Commission (SEC) recommending a series of tailored reforms to improve the Consolidated Audit Trail (CAT) in a way that ensures regulators have the ability to surveil the market without collecting the sensitive personal information of virtually every American investor. In its letter, ASA also urged the SEC to officially name the Financial Industry Regulatory Authority (FINRA) as the CAT operator instead of an unregulated third-party.

“While the ASA strongly supports the ability of the SEC to oversee markets and protect investors—including the creation of a market-wide surveillance system—we believe these goals can be accomplished without jeopardizing retail investors’ sensitive data and privacy,” ASA CEO Chris Iacovella wrote. “We stand with the overwhelming majority of retail investors who do not want to send their PII to the CAT and we look forward to working with the SEC to implement well-tailored reforms.”

“At a time of growing cyber threats targeting government and business, we would reiterate our data security and cyber safety capabilities concerns regardless of who is the plan processor for CAT,” Iacovella continued. “Our customers, in communities across the United States, have repeatedly made it clear that they do not want their sensitive information sent to a one-stop, target-rich environment for cyber criminals.”

“If the SEC wants the CAT to become operational in the near-term, then FINRA should run it. FINRA has most of the Phase II information today, and with a few enhancements to the current OATS system, it could have a true market-wide surveillance system in place in fairly short order.”

ASA also released a Morning Consult national poll showing American investors overwhelmingly oppose sending their personal information to the Consolidated Audit Trail (CAT). While three in four investors trust their broker to keep their personal and financial information secure, nearly four in five would not feel comfortable if their broker were forced to send this information to an unregulated third-party. The survey showed a whopping nine in ten investors are opposed to the government requiring their broker to send investment information to an unregulated third-party.

To read the full letter to the SEC, click here. To view a one-page overview of the Morning Consult polling highlights, click here.

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