"The SEC has overstepped its statutory authority and failed to address investor and industry concerns, leaving us no choice but to litigate," said ASA, a trade association representing small and regional financial service companies, in a statement Oct. 17.
ASA and Citadel Securities filed the lawsuit in the 11th U.S. Circuit Court of Appeals in Atlanta, with the plaintiffs represented by law firms Consovoy McCarthy and Jones Day, respectively.
On Sept. 6, the SEC finalized a revised funding model of the CAT, which previously had exchanges and alternative trading systems pay fees based on their market share, and industry members, such as broker-dealers, pay fees according to their message traffic. The new amendment makes it so fees are determined by executed shares, and the fees are divided evenly among three parties: the exchanges and alternative trading systems, the executing brokers representing buyers and the executing brokers representing sellers.
After the new funding model was finalized, ASA spoke out against the change and the CAT, in general.
"The CAT funding model is a prime example of an agency adopting a rule it couldn't pay for and then illegally appropriating the funds of market participants to fund it. We strongly object to the SEC imposing a tax on American investors to fund the CAT," said Christopher Iacovella, ASA president and CEO, in a Sept. 6 statement. "ASA also remains vehemently opposed to the CAT's unconstitutional collection of investor's personal and financial information, and we urge every American to question this unprecedented intrusion into their private lives."
In an email, an SEC spokesperson said, "The commission undertakes its regulatory responsibilities consistent with its authorities."
