Lafayette Reporter

Senator John Kennedy of Louisiana has introduced the Protecting Investors’ Personally Identifiable Information Act, a bill aimed at safeguarding the privacy of American investors. The legislation seeks to prevent the Securities and Exchange Commission (SEC) from mandating brokers to submit personally identifiable information (PII) to its Consolidated Audit Trail (CAT).

The Trump administration's SEC had previously issued an order exempting certain PII, such as names, addresses, and birth years, from CAT reporting. Kennedy's proposal intends to make this exemption permanent.

"Americans assume their private information is secure when they invest money in the U.S. stock market. However, the SEC’s unlawful Consolidated Audit Trail could put their data in jeopardy," stated Kennedy. He emphasized that his bill would protect investors from potential threats by limiting unnecessary data collection.

Representative Barry Loudermilk introduced a similar bill in the House of Representatives. "The SEC’s collection of personal financial information through the Consolidated Audit Trail is unconstitutional and entirely unnecessary," Loudermilk remarked, highlighting cybersecurity risks associated with foreign adversaries and hackers.

The Senate version of the bill has garnered support from several co-sponsors including Senators John Boozman, Katie Britt, Tom Cotton, Steve Daines, Jerry Moran, Pete Ricketts, and Mike Lee.

Boozman expressed concerns about requiring brokers to submit sensitive data into a central database: "Requiring brokers to submit investors’ private, identifiable information... will invite even more attempts to compromise Americans’ data privacy."

Britt also criticized the CAT database for holding extensive sensitive financial information: "Since taking office, I’ve pushed back against the profound risks the CAT poses."

Daines pointed out that this legislation aims to enhance cybersecurity by reducing unnecessary data collection: "This bill will increase our cybersecurity and stop the over-collection of unnecessary personal information."

Moran stressed that protecting investor information builds trust and security: "It is important that the SEC only keeps the data it needs instead of housing additional personal information."

Ricketts added that this act is crucial for maintaining confidence among American investors: "The American people should feel confident that their participation in the stock market does not mean the leaking of their private information."

The American Securities Association (ASA) has voiced its support for Kennedy's initiative. ASA CEO Chris Iacovella praised Kennedy's efforts: "Senator Kennedy is a true champion for the American people... The SEC can conduct responsible oversight... without collecting sensitive personal information."

The CAT system became operational on May 31, 2024. It collects customer and order details for equity securities and listed options but has faced criticism due to potential vulnerabilities exposed by recent cyber-attacks on federal agencies.

Kennedy's bill stipulates that while companies must respond within 24 hours to specific requests for PII during investigations or enforcement actions by the SEC, any collected PII must be deleted once relevant issues are resolved.