A group of House Republicans introduced a bill to prohibit the Securities and Exchange Commission from requiring personally identifiable information be collected under the reporting requirements for its consolidated audit trail.
The bill — Protecting Investors' Personally Identifiable Information Act — would "require the SEC to obtain investors' sensitive information from their stockbroker if the SEC needs that information instead of automatically storing every investor's sensitive personal data in the database," said Rep. Barry Loudermilk, R-Ga., the bill's sponsor, in a news release Thursday. "That would protect investors' privacy and significantly reduce cyberrisk, while still ensuring that the SEC can access the information it needs."
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.
Groups like the American Securities Association and Securities Industry and Financial Markets Association have raised concerns about securing CAT data. In March 2020, the SEC exempted the self-regulatory organizations made up of exchanges and securities associations, from having to collect or retain certain retail customer data, including individual Social Security numbers or individual taxpayer identification numbers, dates of birth and account numbers. Instead, broker-dealers are required to report an account holder's name, address and birth year.
Kenneth E. Bentsen Jr., SIFMA president and CEO, voiced support for the bill in a statement and said it is a far safer approach for investors. "To be clear, we do not object to the SEC's or self-regulatory organizations legitimate authority to access individual client data in connection with regulatory investigations, as that authority exists today," Mr. Bentsen said. "Rather, we have repeatedly questioned whether the benefit of collecting such information in a single data base outweighs the risk of such data being compromised to the detriment of individual investors."
The bill was co-sponsored by Reps. Bill Huizenga, R-Mich., French Hill, R-Ark., Warren Davidson, R-Ohio, and Ted Budd, R-N.C.
A spokesman for CAT LLC — the group formed by U.S. exchanges to establish a plan to implement and manage the CAT — declined to comment. The SEC could not immediately be reached for comment.
