The American Securities Association on Tuesday withdrew its lawsuit against the Securities and Exchange Commission to stop the collection of personally identifiable information in the consolidated audit trail.
The lawsuit was originally filed in May but withdrawn after the SEC issued a proposal Aug. 21, aimed at bolstering CAT data security and removing certain personal information from CAT collection requirements.
When fully implemented, the CAT will be a single database for all equity and options trades on U.S. exchanges. Broker-dealers were required to begin submitting data to the CAT on trades they execute on behalf of clients — including institutional investors — on June 22 for equities trades and July 20 for options trades. Operations have run smoothly, industry stakeholders have said.
"While the ASA remains deeply concerned about the privacy and security issues associated with the CAT, we are dropping our lawsuit because (SEC Chairman Jay Clayton) and the commission has granted America's mom-and-pop investors the due process they need to assert their right to privacy and object to the CAT collecting and storing any of their personal and financial information," ASA CEO Chris Iacovella said in a statement.
An SEC spokeswoman declined comment on the ASA lawsuit withdrawal.
With its proposal last month, the SEC said it's seeking to accomplish a number of security-enhancing goals, including providing greater oversight, consistency and transparency regarding the appropriate use of CAT data; removing sensitive personal identifiable information from CAT reporting requirements; and requiring the use of secure analytic workspaces, or SAWs, for the analysis of large data sets, permitting exceptions only when non-SAW environments are subject to third party security assessments and monitoring.
"We believe (the) proposal on CAT data security is a significant step towards further enhancing the security of CAT data and systems as well as the development and implementation of the CAT more generally," SEC officials said in a statement after issuing the proposal, which has a 45-day comment period.