The Securities and Exchange Commission is illegally collecting data from American citizens who invest in the stock market, according to a lawsuit, per the New York Post.
The report noted that New Civil Liberties Alliance filed the lawsuit on Tuesday against the SEC. The NCLA claimed that the agency, through its “Consolidated Audit Trail” program, is actively gathering mass amounts of personally identifiable data.
The SEC is allegedly forcing brokers, exchanges, and clearing agencies to send comprehensive information on every investor’s trades in U.S. markets to a centralized database, according to the report.
The agency is doing all of this without the authorization from Congress and in violation of the Fourth Amendment, which bars unreasonable government search and seizure of private information, per NCLA.
Bloomberg reported that CAT was first proposed in 2010, under former President Barack Obama. It came after a “flash crash” that temporarily cleared out almost $1 trillion of U.S. stocks.
The CAT is reportedly designed to allow the SEC a live look across markets in order to predict and detect any unusual activity and misconduct.
During its Monday briefing, the SEC said that the previous mode of tracking orders was “cumbersome” and “time-consuming,” which is solved by the CAT, per reports.
Despite the ease with which the SEC can now track information, the NCLA says it is “completely unlawful” and that it exposes Americans’ financial data to “grave risk.”
Peggy Little, NCLA senior litigation counsel, said: “By seizing all financial data from all Americans who trade in the American exchanges, SEC arrogates surveillance powers and appropriates billions of dollars without a shred of Congressional authority — all while putting Americans’ savings and investments at grave and perpetual risk.”
“The Founders provided rock-solid protections in our Constitution to prevent just these autocratic and dangerous actions. This CAT must be ripped out, root and branch.”
The lawsuit, which was filed in the Western District of Texas, said the CAT is the “greatest government mandated mass collection of personal financial data in United States history.”
“Historically, a government that wished to track its citizens had to devote large resources to having them followed. That is no longer the case: modern surveillance tools enable mass tracking of individuals’ every movement, every transaction, every purchase, sale, or transfer of securities at low cost while powerful computer algorithms can process that information to reveal personal and private details of each person’s financial life or investment strategy,” the lawsuit says.
“This class action complaint challenges SEC’s shocking arrogation of power to impose dystopian surveillance, suspicionless seizures, and real or potential searches on millions of American investors.”
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