Ending Soon! Save 33% on All Access

Invested in the U.S. Stock Market? A New Lawsuit Alleges a Government Agency May Have Illegally Collected and Stored Your Data The lawsuit claims that the "Consolidated Audit Trail" program (CAT) violates the Fourth Amendment.

By Emily Rella

A new lawsuit alleges that the U.S. Securities and Exchange Commission (SEC) has been illegally tracking the data of Americans who have invested in the stock market.

The lawsuit, filed by the New Civil Liberties Alliance last week in Texas, claims that the agency has been illegally collecting data through the "Consolidated Audit Trail" program (CAT), and that the program is unconstitutional.

The SEC is accused of storing and tracking data that involves "trade information on every investor's trades from inception to completion," which they claim violates the Fourth Amendment.

Related: What the SEC's New Climate Transparency Rules Mean for You

"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," Peggy Little, NCLA senior litigation counsel told Fox News. "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."

Related: SEC hits investment advisors for violation of marketing rules

According to Barron's, the CAT program is a trade-reporting audit system approved in 2016 that allows the SEC and the stock exchange to "trace every order for a nationally-traded stock from origination through modifications, routing, and execution."

The most recent budget approval from the government for the CAT program was $200 million.

The class action lawsuit alleges "modern surveillance tools enable mass tracking of individuals' every move" and the SEC can do so without allocating additional time or resources to collect the desired data.

"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, per Bloomberg.

Emily Rella

Entrepreneur Staff

Senior News Writer

Emily Rella is a Senior News Writer at Entrepreneur.com. Previously, she was an editor at Verizon Media. Her coverage spans features, business, lifestyle, tech, entertainment, and lifestyle. She is a 2015 graduate of Boston College and a Ridgefield, CT native. Find her on Twitter at @EmilyKRella.

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Business News

TikTok Reportedly Laid Off a 'Large Percentage' of Employees as the App's Fate in the U.S. Remains Unclear

Laid-off TikTok employees were notified Wednesday night through Thursday morning.

Personal Finance

This Investment Bundle Includes a Trading Course and Stock Screener Tool for $150

Approach the stock market with an increased understanding.

Business News

Four Seasons Orlando Responds to Viral TikTok: 'There's Something Here For All Ages'

The video has amassed over 45.4 million views on TikTok.

Growing a Business

5 Strategies to Know As You Scale Your Business

Scaling a service-based company requires a comprehensive approach that goes beyond simply increasing revenue. It requires careful planning, strategic decision-making and a deep understanding of market dynamics.

Growing a Business

The Right Way to Ask Someone for a Million Dollars, According to a Fundraiser Who Does It For a Living

No matter what you're raising money for, Wanda Urbanskia says, the same basic rules apply.