Senate Republicans introduced a bill that would prohibit the Securities and Exchange Commission from requiring personally identifiable information be collected under the reporting requirements for its consolidated audit trail.
The Protecting Investors' Personally Identifiable Information Act would allow the SEC to obtain personally identifiable information, or PII, related to investors only by requesting it on a case-by-case basis. Companies and investors trading on the U.S. stock exchanges would need to fulfill the SEC's request for the information within 24 hours, though smaller brokers may request additional time, according to a news release Monday from Sen. John Kennedy, R-La., the bill's sponsor.
The bill, which was initially introduced in the House last month by Rep. Barry Loudermilk, R-Ga., would also require the SEC to delete PII once the agency resolves the investigation or issue that required that information.
"Investors trust the U.S. stock market with their savings and their privacy," Mr. Kennedy said in the news release. "The SEC's Consolidated Audit Trail puts their privacy at risk by collecting personal information it doesn't need."
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 executed on behalf of clients — including institutional investors — on June 22 for equities trades and July 20 for options trades.
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., president and CEO of the Securities Industry and Financial Markets Association welcomed the bill's introduction in a statement.
"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," he said. "In response to these concerns, we have consistently proposed less risky alternatives designed to fulfill the regulatory purposes of the CAT while providing greater protection to investor PII."
The bill was co-sponsored by Sens. Cynthia Lummis, R-Wyo., Mike Rounds, R-S.D., Jerry Moran, R-Kan., Steve Daines, R-Mont., Kevin Cramer, R-N.D., and John Boozman, R-Ark.
The SEC could not immediately be reached for comment.
