The U.S. Securities and Exchange Commission on Monday announced it will exempt the requirement to report personal data such as names, addresses, and birth years to the Consolidated Audit Trail (CAT) system.
Acting Chairman Mark Uyeda justified the move by highlighting the potential security risks of storing such information, citing the increasing sophistication of cybercriminals who could misuse it to impersonate investors.
Uyeda emphasized that the decision doesn’t compromise the SEC’s capability of using the CAT to detect insider trading and market manipulation thanks to other existing investigative tools.
Not all voices within the SEC are on board. Commissioner Caroline A. Crenshaw — who is being seemingly sidelined in the second Trump administration — adamantly opposes this new order, suggesting it undercuts the very purpose of the CAT.
“By eliminating critical data collection, we undermine its use and our own effectiveness…This decision is a loss for markets and investor protection,” Crenshaw argues.
Her statement draws a parallel with the historical impetus for the CAT—the 2010 “Flash Crash,” when regulators realized their inability to promptly analyze market upheavals due to insufficient data.
The CAT’s primary function has been to provide a comprehensive, real-time insight into trading activities, enabling regulators to respond efficiently to market irregularities.
Initially, CAT’s design included requirements for detailed personal identification to ensure precise accountability for trades. In 2020, certain sensitive data like social security numbers were already exempted.
This move coincides with broader trends in securities and finance, where the confidence of retail investors has been shaky, as evidenced by systemic investment plan (SIP) discontinuations and market volatility.
For Crenshaw — who was appointed to the role in 2020, toward the end of Trump’s first administration to fill a Democrat seat — to oppose the move isn’t a surprise.
The Harvard-graduate has widely supported progressive regulations, mostly in agreement with Gary Gensler’s views.
Just last month, her bid to secure another term was pretty much put to an end, after the US Senate Banking Committee canceled the vote on the renomination, amid lobbying from pro-cryptocurrency bodies.
Crenshaw has described the cryptocurrency market to be full of fraud and was expected to be on her way out when her current term completes alongside Gensler during the second Trump administration.
Pro-cryptocurrency and more free-markets-oriented Paul Atkins is set to assume office as the next SEC chair.