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FEP Joins Lawsuit to Take Down SEC’s Illegal Mass Data Collection Machine

— April 30, 2024

The CAT is the largest government-mandated mass collection of personal financial data in American history.

Washington, D.C. – The New Civil Liberties Alliance filed a complaint against the Securities and Exchange Commission (SEC) challenging the agency’s unconstitutional “Consolidated Audit Trail” (CAT). The National Center’s Free Enterprise Project (FEP) is one of the plaintiffs who collectively will stand up proudly on behalf of all Americans against this latest in a long string of illegal actions that the SEC has taken to undermine fundamental American liberties for purely partisan purposes.

The CAT is the largest government-mandated mass collection of personal financial data in American history.

Without any statutory authority, the SEC is forcing brokers, exchanges, clearing agencies and alternative trading systems to capture and send detailed information on every investor’s trades in U.S. markets to a centralized database, to which the SEC and private regulators will have unfettered access.

FEP urges the U.S. District Court for the Western District of Texas to stop this unlawful, unprecedented seizure and mass surveillance scheme in its tracks.

Like thousands of other Americans, the National Center and co-plaintiffs Erik Davidson and John Restivo expected the government to respect our constitutional rights. Running roughshod over that sacred trust, the SEC’s CAT system has seized our, their and your data, taking this property without due process of law in violation of Article I of the Constitution, the Fourth and Fifth Amendments, and the First Amendment freedom of association and expression. This ultra vires action also violates the Administrative Procedure Act.

The CAT database would reportedly be the largest securities database ever created, and the most massive government database of any kind outside the National Security Agency (NSA), putting every American’s financial data and security at grave and needless risk from cybersecurity breaches. Amassing all such data in a single government database exponentially increases the likelihood and scope of a dire security breach imperiling the financial security of all Americans.

Congress never authorized the SEC to set up such a data collection and surveillance system. By doing so anyway, the SEC seizes legislative power, clearly violating Article I of the Constitution, which vests Congress with all lawmaking authority.

The SEC funds its CAT scheme by unilaterally taking billions of dollars from self-regulatory organizations like the Financial Industry Regulatory Authority and other self-regulatory organizations (SROs). This self-appropriation of billions of dollars constitutes taxation without representation and brazenly ignores the Constitution and statutes that reserve tax and appropriations powers to Congress alone. Agencies have no power to fund new programs by raising billions from self-regulatory organizations under their regulatory thumb.

SEC Commissioner Hester Peirce has called the CAT system “a dangerous dog,” pointing out that Americans would never tolerate government organizations partnered with private firms to collect complete information on everything they buy or give government a “direct feed” of movements from their cars’ GPS. Yet the CAT proposes to do just that by commanding SROs and all investors to turn over to the government the far more valuable — and vulnerable — database of their investments and retirement savings.

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Photo by Kevin Ku on Unsplash

FEP Director Scott Shepard said: “FEP feels that it is important that the plaintiffs before the reviewing court include a representative with a track record of standing up for the interests of the large majority of capital investors. We know from long experience that at Gary Gensler’s SEC, it is just ordinary business to misuse authority to discriminate against those who dare to advocate policies or interpretations that differ from the Biden ‘whole-of government’/ESG/BlackRock+State Street+Vanguard policy positions: all the same, leftwing platform.”

“The idea that this SEC can be relied on not to abuse this vast cache of financial information for which it has no legitimate use is laughable. We’re delighted that in joining this case we can rely on NCLA’s brilliant minds and impressive record of success to fight against these unjustifiable invasions of privacy and decency,” concluded Shepard.


The National Center for Public Policy Research, founded in 1982, is a non-partisan, free-market, independent conservative think-tank. Ninety-four percent of its support comes from individuals, less than four percent from foundations and less than two percent from corporations. It receives over 350,000 individual contributions a year from over 60,000 active recent contributors. Contributions are tax-deductible and may be earmarked for the Free Enterprise Project. Sign up for email updates at

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