All stock trades conducted on U.S. exchanges will soon be surveilled by the government, according to a newly implemented plan by the Securities and Exchange Commission (SEC).
The CAT plan was originally proposed under the Obama administration in 2012 but remained dormant under the Trump administration. It is currently being resurrected under the Biden administration.
This plan ran into some resistance last week, however, from a group of lawyers and retired judges who see it as a historic violation of Americans’ civil rights.
According to the NCLA and others who have joined the legal action, the plan expands a trend of already extensive government surveillance, exceeds the SEC’s authority, and infringes on Americans’ Fourth Amendment protections against warrantless government searches.
“The SEC has no statutory authority to do this at all,” Peggy Little, senior litigation counsel with the NCLA, told The Epoch Times, calling the plan “a surveillance system.”
“We think it’s vital to strangle this new illegal power grab,” Scott Shepard, director of the Free Enterprise Project, who has signed on to the complaint, told The Epoch Times.
“The idea that this SEC can be relied on not to abuse this vast cache of financial information for which it has no legitimate use is laughable,” Mr. Shepard stated.
The SEC, however, insisted that it had the necessary authority to enact the CAT system.
“The Commission undertakes its regulatory responsibilities consistent with its authorities,” an SEC spokesperson told The Epoch Times.
‘Mass Surveillance’ of Americans’ Financial Data
The plan’s critics, however, argue that these laudable goals must be weighed against the extensive infringement on Americans’ right to privacy.This database would reportedly allow more than 3,000 government employees in more than 20 agencies to monitor the personal investment activities of tens of millions of Americans in real time, he wrote.
“If our society accepts the SEC’s rationale for CAT, there is no reason to confine the government to databases on investment activities,” Mr. Barr stated. “Digital records on a range of personal activity can help crack criminal cases.
“Phone companies have data from our smartphones, automakers have data from our cars, and so forth,” he wrote. “Why not maximize the efficiency of all law enforcement by pumping this information into government databases, so investigators have it in real time?”
The CAT plan also has its critics in Congress.
By implementing the CAT program, “the SEC has paved the way for the federal agency to follow an investor’s every move,” Mr. Kennedy stated. “Here’s just a bit of the information the SEC is forcing brokers to fork over: their customers’ full names, birth years, addresses, which stocks they bought, which stocks they sold, and when those transactions occurred.”
The extensive cost of setting up and running the CAT program will be paid by brokerage firms, but critics say those costs will simply be passed on to everyday Americans.
“Those costs will run into the billions of dollars and will represent an enormous deadweight tax on American investors,” Ms. Little said.
Critics also worry that collecting Americans’ private financial information in government databases could leave it vulnerable to hackers.
“The SEC itself has been hacked on several occasions,” Ms. Little said. “It is shocking to me that they would take all of this data and expose it to hacking and to theft.”
“Just last week, the SEC filed charges against 18 people, most of them in China, who engaged in a six-year market manipulation scheme using dozens of accounts, across many brokerage firms, that resulted in 31 million dollars of illicit profits,” Mr. Brown stated. “While we’ll never know if the new system would have made it easier to uncover those crimes, it is that kind of activity that the SEC should have the technology to uncover.”
